US Dollar May Not Capitalize on Consumer Confidence Pickup
- Yen gains as Asia Pacific stocks follow Wall Street lower
- US Dollar still digesting after Wednesday’s sharp decline
- UofM gauge of US consumer confidence may pass quietly
The Japanese Yen traded broadly higher as stocks across Asia Pacific bourses declined, boosting the appeal of the standby anti-risk currency. Regional shares shed 0.6 percent, echoing a steep selloff on Wall Street. The liquidation seems to reflect lost confidence in the ability of the embattled Trump administration to make good a pro-growth policy agenda.
The US Dollar declined against all of its major counterparts in a move that was seemingly corrective following yesterday’s gains that – in turn – marked a retracement after Wednesday’s brutal selloff. That too reflected the unraveling of the so-called “Trump trade” as Fed rate hike prospects dimmed along with hopes for an inflationary fiscal policy including infrastructure spending, tax cuts and deregulation.
Looking ahead, a lackluster offering on the European data docket puts US consumer confidence measure from the University of Michigan in focus. A slight improvement is expected in August after the gauge hit a nine-month low in July but even an upside surprise echoing steady improvement in data outcomes since mid-June may fall on deaf ears as Fed tightening bets struggle amid political uncertainty.
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** All times listed in GMT. See the full DailyFX economic calendar here.
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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