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U.S. Consumer Confidence Rises to 12-Month High in February

U.S. Consumer Confidence Rises to 12-Month High in February

Tzu-Wen Chen, Technical Strategist

THE TAKEAWAY: [U.S. consumer confidence jumps to 12-month high in February] > [Growing optimism boosted by improving financial and labor markets] > [USD strengthens]

Confidence among U.S. consumers soared in February to its highest level since February 2011. The Conference Board’s consumer confidence index jumped from 61.5 in January (revised slightly upwards from 61.1) to 70.8 in February. Economists polled in a Bloomberg News survey had anticipated an increase to 63.0.

The upward trend in consumer sentiment reflects growing household optimism on economic recovery in the U.S., boosted by expectations for further improvements in business conditions, employment and income in the U.S. in the intermediate future. Today’s report supports other data on consumer sentiment. The Bloomberg Consumer Comfort Index for February climbed to minus 38.4, the highest level this year, while the University of Michigan confidence index rose to a 12-month high of 75.3 in February. Stabilization in financial markets and an improving stock market have also been factors in the improvements in consumer sentiment.

USD/JPY 1-minute Chart: February 28, 2012

U.S._Consumer_Confidence_Rises_to_12-Month_High_in_February_body_Picture_1.png, U.S. Consumer Confidence Rises to 12-Month High in February

Chart created using Strategy Trader– Prepared by Tzu-Wen Chen

In the minutes after the data release, the greenback strengthened against the major currencies, gaining 21 pips against the Japanese yen in the first ten minutes. Despite a slight pullback, the U.S. dollar continued to rally higher, buoyed by growing market confidence that the U.S. economy is showing further signs of stability and growth. At the time of this report, the greenback was trading at 80.692 yen.

--- Written by Tzu-Wen Chen DailyFX Research

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.