US Consumer Confidence, US Dollar, Russia, Ukraine – Talking Points
- US Consumer Confidence 107.2 (Est. 107, Prev. 110.5)
- US Dollar Index sinking on Euro strength, 98.00 test imminent
US consumer confidence rebounded marginally in March as consumers remain upbeat about the economy despite persistent inflation. Despite beating Wall Street estimates, the print represents a decline from February’s reading of 110.5. Household sentiment may continue to remain under pressure as energy prices remain elevated, while the Russia-Ukraine conflict also continues to weigh on global sentiment. Perhaps of note, was that consumers were noticeably optimistic about current business and labor market conditions.
With consumer confidence continuing to wane, it will be interesting to watch how the tightening path of the Federal Reserve may evolve given the underlying data. Worries may also arise from an inverted yield curve, with the 2s-10s spread coming eerily close to turning negative. While Fed Chair Jerome Powell indicated that he does not religiously watch the 2s-10s spread, the market’s favorite recession indicator may be about to start flashing some warning signs.
2s-10s Spread Weekly Chart (US Treasuries)
Chart created with TradingView
The US Dollar Index has been under pressure for nearly all of Tuesday’s session as EUR/USD continues to push higher following recent developments in negotiations between Russia and Ukraine. The Russian delegation revealed they would wind down military operations near Kyiv and Chernihiv, but they did not indicate that operations would cease. After finding resistance once again at the 99.30 area, the Dollar Index finds itself back below 99.50. Price may find a bottom around 98.97, which represents the 0.618 Fib retracement of the Jan. 2017 to Feb. 2018 selloff.
US Dollar Index 1 Hour Chart
Chart created with TradingView
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--- Written by Brendan Fagan, Intern
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