Greenback Weakens As U.S. Consumer Sentiment Unexpectedly Falls in March
THE TAKEAWAY: [U. of Michigan Confidence Survey Index Falls, Snapping 6-month rally] > [Household Sentiment Falls] > [USDollar weakens]
Confidence among U.S. consumers unexpectedly fell in March, with preliminary readings of the University of Michigan Confidence Survey Index (MCSI) dropping to 74.3 from February’s reading of 75.3. The median forecast according to 70 economists surveyed by Bloomberg News was 76.0. The lower-than-expected reading snaps a six-month rally in household sentiment after hitting a 12-month high in February.
The lower MSCI figure reflects weaker consumers’ optimism about the economic recovery and expectations on business conditions, employment and income in the U.S. in the intermediate future.
AUDUSD 1-minute Chart: March 16, 2012
Chart created using Strategy Trader– Prepared by Tzu-Wen Chen
Immediately after the data release, the U.S. dollar climbed slightly against most major currencies before quickly reversing directions. The greenback tumbled against the higher-yield currencies, extending earlier losses after a lackluster U.S. consumer price index print. The U.S. dollar fell by 9 points against the Australian dollar in the first 10 minutes. However, at the time of the report, the AUDUSD pair was seen retracing after reaching a high of 1.0597. If household sentiment shifts higher by the end of the month, we could see the U.S. dollar strengthening, as the gaining pace of the U.S. economic recovery could limit the prospects for the Federal Reserve’s scope to conduct another round of quantitative easing.
--- Written by Tzu-Wen Chen DailyFX Research
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