Forex News: USD/JPY Slightly Lower as US Confidence Plummets
The fiscal cliff deal reached by US politicians has already delivered its first victim: the US consumer. Higher payroll taxes levied across the board damaged sentiment across all income classes above $15K/year, while consumers of all age groups – in particular the under 35 demographic – saw a significant drop in confidence. The index’s drop to 58.6 in January from a revised 66.7 in December dragged sentiment to its weakest level since November 2011 – right after the Euro-zone crisis started to accelerate again, before the European Central Bank poured over €1 trillion into the region’s banks over the ensuing three months.
This may not be the floor in US consumer sentiment, either. The upcoming budget sequesters – $1.2 trillion in automatic spending cuts on domestic programs and defense – is still on slate for early-March. Neither Democrats nor Republicans have offered any indication that a deal would be reached to avoid what would be an economic disaster for the US economy, with Republican budget architect Representative Paul Ryan (R-WI) going so far as to say that “I think the sequester is going to happen.”
USDJPY 1-minute Chart: January 25, 2013
Charts Created using Marketscope – Prepared by Christopher Vecchio
In reaction to the data, the Japanese Yen gained across the board, with the USDJPY sliding ahead of the release from 90.74 to as low as 90.52. At the time this report was written, the USDJPY had rebounded back to 90.95.
--- Written by Christopher Vecchio, Currency Analyst
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