US Dollar Ticks Higher on Upbeat Consumer Sentiment
Consumer Sentiment, COVID-19, US Dollar – Talking Points:
- US Dollar price action ticks slightly higher on upbeat consumer confidence
- Consumer's views on the economy turn more optimistic
- Many consumers expect labor market conditions to improve
The University of Michigan consumer sentiment survey crossed the wires Friday morning at 78.9, beating expectations for 75.0, and up from the previous months read of 72.3. US Dollar price action ticked higher on the report’s release as the slightly improved figure gives hope that consumers are starting to gain confidence at a time when states are beginning to lift stay-at-home orders.
US Dollar Price Chart (1-Min Chart)
Source: IG Charts
Digging into the survey, the current conditions index, a sub-component of the larger index, which shows how consumers are currently viewing the state of the economy, revealed a reading of 87.8, up from the previous months 82.3 figure. Another sub-component, the expectations index, which measures consumers forward expectations for the economy showed a 73.1 figure, up from 65.9 from May. The better than expected consumer confidence figure will likely inject some optimism to market participants as the figure gives hopes for a swift economic recovery.
However, many fear a second wave of COVID-19 infections that could possibly result in continued restrictions, and therefore hamper the economy further as consumers remain in their homes. Notwithstanding, a bright spot to note in the sentiment report focuses on a more optimistic labor market outlook. A record number of consumers expect an improvement in the jobless rate according to Richard Curtin, Surveys of Consumers Chief Economist. Granted that, the report also notes that consumers do not expect favorable economic conditions to return in the near term.
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.