The euro surged to fresh record highs of $1.4153 in mere moments following the Consumer Confidence figures, but limited extension left it only marginally above yesterday’s peak. The Canadian dollar likewise saw a strong bid following morning data, but its inability to forge new highs against the greenback suggests further short term USDCAD retracement is likely. Mixed performance in the US Dow and S&P 500 index left the Japanese Yen bid, with the dollar shedding ¥0.40 to ¥114.45.
US Consumer Confidence fell to its lowest since November, 2005, as the
domestic resident grew considerably less optimistic on current and future
economic prospects. Indeed, the Present Situation sub-index fell strongly for
the second consecutive month and Expectations hit its lowest in over a year.
This translated into tepid plans for future expenditures on durable goods and
housing. Only 2.7 percent of all respondents said that they planned to buy a home
within the following six months—a full 0.9 percentage points off of August’s
multi-month highs. The worsening sentiment can be attributed to
highly-publicized housing and mortgage troubles, but a similar drop in
Employment sentiment signals that the domestic consumer has seen material signs
of slowing
A simultaneous Existing Home Sales report only further worsened sentiment
for the greenback, as sales fell to 5-year lows and unsold inventories soared.
The headline result was marginally better than consensus forecasts, but this
was hardly cause for celebration as transactions fell a whopping 4.3 percent
through August. This led to a jump in levels of unsold homes and suggests that
prices may need to fall significantly before we see a major turn in the ongoing
housing recession.
US equity markets fell on the housing data, but a later bounce saw the
Dow Jones Industrial Average nearly flat on the close. The diversified S&P
500 index was not quite as fortunate, however, as the key market barometer shed
0.2 percent to 1,515. Yet a bid in key tech stocks left the NASDAQ Composite
higher—0.4 percent up to 2,677.
Written by David Rodriguez, Currency Analyst for DailyFX.com
DailyFX provides forex news on the economic reports and political events that influence the currency market.
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