Talking Points:
- University of Michigan confidence falls to a nine month low
- Shutdown and impending default affecting US consumers’ outlook
- USD/JPY unchanged
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US consumer confidence fell to a nine month low amidst a government shutdown and impending debt default, according to the University of Michigan’s preliminary index result for October.
The U. of Michigan confidence index was reported at 75.2, slightly disappointing expectations for 75.3 and below the 77.5 index result reported for September. Economic conditions actually rose slightly to 92.8 according to the index, but the economic outlook fell from 67.8 to 63.9.
US equity indexes rose over 2% in yesterday’s session, when republican members of the House said they would propose a bill to delay the debt ceiling by six weeks and possibly end the government shutdown. Furthermore, Fed Chairman Bernanke said that the FOMC will not raise interest rates until unemployment hits 6.5%, so significant economic indicators are guiding speculation on when tapering of quantitative easing will begin. But today’s report of a decline in consumer confidence did not negatively impact trading of the US Dollar.
In fact, the US Dollar actually rose about ten pips against the Japanese Yen, likely due to a general strengthening of risk trends following the New York open. USD/JPY may continue to see resistance by the 100-day moving average at 98.54, and support may come in by a 2-month low at 96.56.
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USD/JPY Daily: October 11, 2013
Chart created by Benjamin Spier using Marketscope 2.0
-- Written by Benjamin Spier, DailyFX Research. Feedback can be sent to instructor@dailyfx.com .
