US Dollar Fell After Lowest Consumer Confidence Figure Since July

Talking Points:

• US Consumer Confidence prints 92.2 in February vs 97.2 expected and 97.8 in January
• US Dollar fell after the lowest Consumer Confidence figure since July 2015
• Data may have added to dovish traders’ calculations of a Fed rate hike hold

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The greenback fell against a basket of currencies after the Conference Board reported its lowest US Consumer Confidence print since July 2015. February’s figure was 92.2, lower than the consensus forecast of 97.2 and January’s revision of 97.8.

The survey noted that pessimism increased in the area of business conditions, personal financial situations and towards the financial markets. Sentiment in regards to labor conditions diminished to a lesser extent. Although the Consumer Confidence index fell short of expectations, the report noted that respondents’ valuation of the economy indicate their belief that it will grow at a restrained pace.

The disappointing news print may have strengthened conviction to dovish traders’ speculation that the FOMC will not continue its tightening cycle in the near-term. The wage expectations component of the survey in particular cooled one of the strongest outlets for rate speculation with a further shift away from anticipated income growth. According to Fed Fund futures, the probability that the central bank will not raise interest rates at its March 16th meeting increased to 89.7 percent versus yesterday’s probability of 71.8 percent.

Chart by Chief Currency Strategist John Kicklighter