EUR/USD Continues Intraday Slip after US Consumer Confidence Beats
- US Consumer Confidence rises to 101.1 from 96.7 vs 97.0 expected.
- EUR/USD extends losses after US Consumer Confidence beats expectations
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The US Dollar has continued its strong run since Friday, with its latest burst higher powered by a gauge of US consumer sentiment this morning. According to the Conference Board, US Consumer Confidence in August popped to the highest level since September 2015. The survey, which polls approximately 3,000 households, is a closely watched barometer of consumer attitudes and measures general sentiment toward business conditions, short term outlook, income, and the labor market.
The Research Group said that its Consumer Confidence Index jumped to 101.1 from a downwardly revised 96.7 in July. Analysts surveyed by Bloomberg News had expected the confidence indicator to inch lower to 97. The component breakdown showed the Present Situation Index rose climbed to 123.0 from 118.8 whereas the Expectations Index rose to 86.4 from 82.0
The Director of Economic Indicators at the Conference Board Lynn Franco commented: “Consumers’ assessment of both current business and labor market conditions was considerably more favorable than last month. Short-term expectations regarding business and employment conditions, as well as personal income prospects, also improved, suggesting the possibility of a moderate pick-up in growth in the coming months.”
Although it is difficult to draw conclusions from one single report, rising consumer confidence may signal a further pick up in consumer spending (July’s figures were strong) which, in turn, could bolster economic growth as household consumption expenditure accounts for approximately 70% of GDP.
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Immediately after the release of the Consumer Confidence Survey EUR/USD fell as low as $1.1136 as the upbeat tone of the report may offer further encouragement to the Fed that the US Economy is ready to withstand higher borrowing costs as consumer spending will continue to buttress the broader recovery. At the time this report was written, however, EUR/USD had settled around $1.1140. In any case, the US August Jobs’ report scheduled to come out Friday will likely offer more clues about the health of the US Economy and whether the Fed will move in this year or stand pat on monetary policy.
--- Written by Diego Colman, DailyFX Research
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