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Consumerconfidence

Euro slides on Nordstrom squeezeThe euro has taken a nasty tumble today. In the North American session, EUR/USD is trading at 1.0144, down 0.76%. The energy crisis surrounding Nord Stream 1, a key channel for Russian gas exports to Europe continues to simmer. Perhaps the pipeline should be referred to as 'Nord Brook 1', after Gazprom, the Russian energy giant, warned it will cut flows through the pipeline to just 20% of capacity starting Wednesday, claiming "technical issues". The EU has charged that the move is politically motivated, but Vladimir Putin is holding the better hand of cards and has no compunction about weaponising energy exports to the West. The EU has scrambled to scale back its energy dependence on Moscow and announced today that member states had agreed on a voluntary reduction of 15% in natural gas imports. The deal was reached at lightning speed, reflecting the tremendous apprehension in Brussels about an energy crisis this winter. Still, the agreement has apparently been watered down, with exemptions for members that are not directly linked to EU gas pipelines and are completely dependent on Russia. The latest squeeze on Nord Stream 1 has unnerved investors and sent the euro sharply lower. With the war in Ukraine dragging on and a potential energy crisis looming, it's no surprise that German confidence indicators are under pressure. Ifo Business Sentiment slipped to 88.6 in June, down from 92.2 in May. The soft reading was accompanied by a warning from the Ifo Institute, which warned of a looming recession in Germany, due to soaring energy prices and the possibility of a gas shortage in Europe's largest economy. On Wednesday, Germany releases GfK Consumer Climate, which is expected to fall to -28.9 in August, down from -27.4 in July. The index has been steadily weakening and has been mired in negative territory since October 2021. All eyes will be on the Federal Reserve on Wednesday, with a live meeting that will include a supersize rate hike. The markets are expecting a 75bp increase for a second straight meeting, but a massive 100bp hike cannot be ruled out. A 75bp move could be met with a yawn by the US dollar, while a 100bp increase would be a surprise and likely boost the greenback. EUR/USD continues to test support at 1.0191.  The next support level is 1.0105 There is resistance at 1.0304 and 1.0390
by OANDA
Australian dollar rises, RBA minutes nextThe Australian dollar has started the trading week with strong gains, extending the upswing from Friday. AUD/USD is trading at 0.6835, up 0.62% on the day. Market risk sentiment has strengthened, courtesy of better-than-expected data out of the US on Friday. Headline retail sales and core retail sales both posted a gain of 1.0% MoM in June, above the forecast and an improvement from the May numbers. As well, UoM Consumer Sentiment improved slightly to 51.0, above the consensus for a contraction at 49.0. This has boosted the Australian dollar, a bellwether of risk appetite. The financial markets were pleased with US retail sales, which points to consumers' willing to spend despite the bite that higher inflation is taking out of disposable incomes. At the same time, strong consumer spending paves the way for a massive 100bp hike from the Federal Reserve next week, as strong US data indicates that the economy is strong enough to withstand higher rates. There is a pre-meeting blackout of the FOMC ahead of next Thursday's meeting, but we can still expect plenty of discussion about whether the Fed will deliver a 75 bp or 100 bp increase. The more likely scenario is a 75bp move, but the Fed has surprised before, and a 100bp move is certainly on the table. The RBA is also in the midst of a rate-tightening cycle, but the cash rate is only at 1.35%, which won't make a significant dent on surging inflation. The central bank is likely to continue tightening throughout the remainder of 2022. The minutes from the July meeting will be released on Tuesday, and investors will be looking for clues as to how aggressive the RBA plans to be as it tries to balance hiking rates without choking economic activity and causing a recession. There is resistance at 0.6871 and 0.6949 0.6776 is providing support, followed by 0.6698
by OANDA
Consumer Sentiment's Role in Long-Term Buying Opportunities Consumer Sentiment is just one tool for investors to use when choosing whether to buy, sell, add, or trim stocks. But it can be a very useful tool, especially when markets are heavily skewed in one direction as they appear to be today. There have only been four (the three breaches during the 08 crisis I count as one) occurrences in the past when the U.S. consumer sentiment has dipped below the 57.40 mark. As we are currently quickly approaching 57.40 I have taken the liberty to map out the five-year returns of each of the four previous lows in consumer sentiment (assuming a buy-in during the month of the 57.40 breaches). 11/1974: 43.6% five-year return 04/1980: 76.02% five-year return 06/2008: 16.31% five-year return 11/2008: 81.33% five-year return 02/2009: 116.35% five year return 08/2011: 58.77% five-year return Average nominal five-year return on the S&P500 since 1957: roughly 53% Importance of these data? The takeaway here is that historically low consumer sentiment (sub 57.40) has in the past provided great opportunities for patient investors to enter long-term positions in stocks and yield abnormally high returns. Basing an investment decision on one economic metric is not an intelligent strategy, but using consumer sentiment to help time your buying position appears to be an effective method going off of historic price action.
FRED:UMCSENT
by Gooby_Trades
Sterling rises despite weak UK dataThe pound has edged higher today, shrugging off soft UK releases. Retail sales for May fell 0.5%, and declined 4.7% YoY, below the estimate of -4.5% (-5.7% prior). It was a similar story for core retail sales, which came in at -5.7% YoY, worse than the forecast of -5.1% (-6.1% prior). The sharp declines in consumer spending should not come as a surprise, given the inflation squeeze which continues to drag down the UK economy. Consumer confidence numbers remain in deep-freeze, as GfK consumer confidence for May notched lower to -41 in June, down from -40 in May. The continuing rise in the cost of living has become a crisis for UK households, and the predictable result has been weaker consumer confidence and spending. Inflation in the UK shows no signs of peaking, as headline CPI rose to 9.1% in May, up a notch from 9.0% in April. Inflation expectations are rising, and this week's major rail strike could be an initial response from organized labour, which will not be satisfied with 3% wage hikes when inflation is closing in on double digits. The BoE hasn't had succeeded in curbing inflation and expects inflation to top 11% later this year before finally easing. Unlike the Federal Reserve, the BoE has been reluctant to aggressively raise rates, with the BoE's most recent hike of 0.25% paling in comparison to the Fed's salvo of 0.75%. Fed Chair Powell's appearance on Capitol Hill this week was keenly watched by nervous markets. Powell didn't hold back any punches, acknowledging that a recession was "certainly a possibility", adding that a soft landing would be "very challenging". Powell mentioned the usual suspects beyond the Fed's control, namely, high commodity prices, supply chain issues and the Ukraine war. The Fed has not ruled out further 0.75% hikes, which will help curb inflation but could tip the economy into a recession. 1.2187 is providing support, followed by 1.1969  GBP/USD continues to test resistance at 1.2283. Above, there is resistance at 1.2441
by OANDA
1
NZ dollar slides as risk sentiment fallsThe New Zealand dollar is sharply lower on Tuesday. NZD/USD is trading at 0.6261, down 1.14% on the day. New Zealand data has been mixed this week. BusinessNZ Services Index rose to 55.2 in May, up from 52.2 in April. This points to stronger expansion in the services area. However, Westpac Consumer Confidence plunged to 78.7 in May, its lowest level ever recorded. This was down from 92.1 in April. Consumers are very unhappy about the cost of living crisis and the survey found that consumers are scaling back on leisure activities, such as dining at restaurants. The double blow of higher mortgage rates and increases in living expenses has taken a large chunk of disposable income. If this results in a decrease in consumer spending, it could lead to a downturn in economic growth. Consumer angst could have a major effect on the Reserve Bank's policy. If consumer demand sinks, the central bank may have to ease off on the size of future rate hikes. The RBNZ has been tightening aggressively and the cash rate, which is currently at 2%, is expected to rise to 3% by the end of August and possibly to 4% in 12 months' time.  The RBNZ is in a fierce battle with inflation and if demand falls, inflation could peak and allow the central bank to ease up on its tightening cycle. The Bank is also monitoring inflation expectations, with policy makers keen to ensure that expectations don't become unanchored. With no US releases today, Fed Chair Powell's semi-annual appearance on Capitol Hill will take over center stage. Powell will brief lawmakers today and tomorrow, and anxious investors will be on the lookout for clues on where monetary policy is headed. Will Powell signal that he plans to ease on tightening? Powell's testimony could have a strong impact on the financial markets and should be treated as a market-mover for the US dollar. NZD/USD tested support at 0.6302 earlier. Below, there is support at 0.6209 There is resistance at 0.6408
by OANDA
Aussie sinks as risk sentiment slidesThe week ended with a disappointing US inflation report. Headline inflation in May rose to 8.6% YoY, up from 8.3% in April. Core inflation eased to 6.0%, down from 6.2%, but that was little comfort for the markets, which are showing signs of panic over entrenched inflation. The result was that risk appetite fell, sending the US dollar surging against the major currencies. With no sign of an inflation peak, it's clear that the Federal Reserve will have to keep its foot pressed to the floor when it comes to upcoming rate hikes. This makes it likely that the Fed will deliver 50-bp hikes in June, July and September. Just a couple of weeks ago the Fed signalled it would take a break in September, but that now seems a luxury it can't afford, given that inflation hasn't eased. There have been calls for the Fed to deliver a massive 75-bps salvo at Wednesday's meeting, but such a shock move seems unlikely, especially in the current turbulent economic environment. If Fed Chair Powell is looking to send a hawkish message to the markets, he could hint at the meeting press conference that a 75-bp increase is on the table if inflation doesn't ease. Such a warning would likely boost the US dollar. There are some key releases out of Australia this week, kicking off with NAB Business Confidence on Tuesday. The indicator slowed to 10 points in May, down from 16 in April. If the downtrend continues, the Australian dollar could continue to lose ground. This will be followed by Westpac Consumer Sentiment on Wednesday and the May employment report on Thursday. AUD/USD is testing support at 0.6973, followed by support at 0.6902 There is resistance at 0.7181 and 0.7110
by OANDA
1
Euro yawns after soft German confidence dataThe standoff in Ukraine continues to escalate, but the financial markets remain calm for now. The US and other western nations have slapped further sanctions on Russia after Moscow sent troops to two breakaway regions in eastern Ukraine. Despite this, investor risk appetite recovered on Tuesday, and the euro, which is extremely sensitive to the conflict in its backyard, is trading sideways. The US has canceled a meeting between the US Secretary of State and the Russian Foreign Minister, and a Biden-Putin summit will not take place, given the volatile situation in Ukraine. Nonetheless, there is a sliver of hope that the diplomatic door has not been shut completely, although the prevailing mood is still that Russia will invade and perhaps conquer the capital Kyiv. German GfK consumer sentiment expects confidence to weaken in March, with a reading of -8.1, down from -6.7 in February. This was lower than the consensus of -6.3 and marked a third straight month of negative readings, as consumers continue to feel pessimistic about economic conditions. The survey was conducted in mid-February, and the Omicron wave and high inflation were the primary factors which impacted on the mood of consumers. The Federal Reserve is widely expected to raise rates at its March meeting. The most likely scenario is a traditional hike of 25 basis points, but just a week ago there was a reasonable likelihood of a 50-basis point move. However, the Ukraine crisis and the surge in oil prices could trigger stagflation, which could prod central bankers to hold off on any rate increases. Even if the Fed pushes ahead with a rate hike in March, the Ukraine standoff could well slow down the Fed's plans to raise rates, especially if there is a Russian invasion and oil prices rise to USD 120 a barrel or higher. EUR/USD faces resistance at the 100-MA at 1.1391. Above, there is resistance at 1.1449 There is support at the 61.8 fibo at 1.1264, followed by 1.1217
by OANDA
New Zealand dollar powers higherThe New Zealand dollar has climbed above the 0.68 level on Wednesday. In the North American session, NZD/USD is trading at 0.6816, up 0.65% on the day. The currency has jumped 1.09% this week. Volatility is the name of the game, at least in the month of December. With market participants eyeing Christmas and the markets marked by illiquidity, we have been seeing volatility in the currency markets, particularly in minor currencies such as the New Zealand dollar, which are barometers of risk sentiment. The currency has been moving up and down like a yoyo. Last week, the explosion of Omicron cases across Europe sent risk appetite lower, and NZD/USD fell 0.84%. The currency has rebounded with gains this week of 1.0%, buoyed by reports that Americans and Brits are rushing to get Covid shots while the US and UK governments are securing millions of Covid vaccines. There are conflicting reports as to whether Omicron is as severe as the Delta variant, but it's clear that Omicron is much more contagious, and there are growing concerns that hospital resources could be stretched past the limit as Omicron spreads in Europe and the US. The New Zealand dollar's erratic moves have been due to headline-derived volatility rather than any market trends. Care should be exercised, as this could continue right up to the New Year. The lockdowns may have been lifted, but the initial relief has dissipated and New Zealanders are feeling a sense of pessimism as we head into 2022. The Westpac Consumer Sentiment Index fell below the 100 level in Q3, which indicates a majority of surveyed consumers were pessimistic about economic conditions. New Zealand has again closed its borders, in an attempt to keep a tight lid on the few Omicron cases that have been detected in the country. Will the island nation manage to stave off another wave of Covid? Only time will tell.
by OANDA
July PMI For 4 Major Economies (26 July 2021)Last Friday, IHS Markit released the preliminary PMI data for four major economies. Below are the key points from the individual reports. United States Services sector slowed down to a 5-month low pace due to labour shortages. Manufacturing sector expanded at record high pace. Prices of goods and services remained steep as firms pass on the high costs to consumers. Total employment growth eased to 4-month low. Business confidence declined to 7-month low mainly due to rising inflation, labour and material shortages, as well as rising concerns over the pandemic. Europe Services sector expanded at the fastest pace in 15 years due to reopening of economy from the lifting of COVID restrictions. Manufacturing sector expanded at a slightly reduced pace due to supply constraints, which led to an increase in backlogs of work. Employment continues to rise sharply. Prices for goods and services rose as demand surpassed supply. Business confidence declined to 5-month low as concerns over the COVID Delta variant grow. United Kingdom Business activities in the UK slowed down considerably due to shortages of workers and raw materials. Backlogs declined due to a slowdown in business activities. Business and consumer confidence fell due to the pandemic and Brexit-related difficulties with export sales. Employment growth eased to the slowest level since March. Australia Services sector slipped into contraction for the first time in 11 months. Renewed COVID restrictions caused by the spread of Delta variant affected demand and output in Australia. Decline in demand in the services sector led to a decline in work outstanding. Manufacturers continue to report shortages of supply, leading to an increase in work outstanding. Employment in both the services and manufacturing sectors continue to grow.
TVC:DXY
by GH_Lee
Aussie slides on soft consumer confidenceThe Australian dollar has reversed directions on Wednesday and recorded considerable losses. In the European session, AUD/USD is trading at 0.7750, down 0.52% on the day. Investors gave the Aussie a thumbs down on Wednesday after Westpac Consumer Sentiment fell 4.8% in May. The trend of improving consumer confidence over the past three months was broken. Still, a review of the Westpac report shows a "glass half full" approach, as the report notes that the index dropped from 118.8 to 113.1, its second-highest print since April 2010. The RBA will hold a policy meeting on June 1, and the central bank will announce its plans for Yield Curve Control (YCC) and QE. The Westpac report says that the bank remains committed to monetary stimulus and this means that QE will be extended for a further A$100 billion in September, and YCC policy will shift from April 2024 to November 2o24. The bank has repeatedly said that it has no plans to tighten policy prior to 2024. The market will be treated to a dump of Australian data on Thursday. Consumer Inflation Expectations is first up (1:00 GMT), with a consensus of 3.6%, up from 3.2%. This indicator is closely watched as inflation expectations can translate into actual inflation, so a strong gain would be a signal that inflationary pressures are growing. The highlight will be Employment Change (1:30 GMT), with a small gain of 15.0 thousand expected, down from 70.7 thousand. Australia also releases Manufacturing and Services PMIs (23:00 PMI). Both sectors are in good shape, a testament to the strong Australian economy. Manufacturing PMI is projected at 59.8 and Services at 58.9, which are well into expansionary territory. The 50-level separates contraction from expansion. AUD/USD faces resistance at 0.7887 and 0.7990. On the downside, there are support levels at 0.7684 and 0.7584.
by OANDA
CAD edges higher, US confidence data nextThe Canadian dollar is slightly higher on Friday. Currently, USD/CAD is trading at 1.2513, down 0.25% on the day. On the fundamental front, Canada will release tier-2 data, including Housing Starts. In the US, today's highlight is UoM Consumer Sentiment, which is expected to accelerate to 88.9 points. Canada's ADP job report has been bleak in recent months, with triple-digit declines in the past two months. However, the indicator roared back in March, with an impressive gain of 634.8 thousand new jobs. ADP attributed the strong rebound in the labour market, which was based in all sectors, to relaxed health restrictions in some provinces. However, the picture could be significantly worse in the April data, as Ontario, the most populous province, imposed a 4-week lockdown at the end of March. Canada's Covid rate per capita is now outpacing the US, and this is likely to take a toll on the economy. The news was far less positive in the manufacturing sector. Manufacturing Sales suffered a decline of 1.6%, worse than the forecast of -1.1%, and its weakest showing in six months. In the US, retail sales surged in March, as consumers loosened their purse strings. Headline retail sales sparkled at 9.8%, while Core Retail Sales rose 8.4%. Both releases easily beat their estimates of 5.8% and 5.1%, respectively. The catalyst for the surge in consumer spending was the latest batch of government stimulus, with US households receiving stimulus cheques of 1400 dollars, as well as many states relaxing health restrictions. US consumers were only too happy to hit the stores and purchase big-ticket items, including cars, electronics and furniture. Somewhat surprisingly, the explosive retail sales release failed to push the US dollar higher, as the currency markets appeared more focused on other matters, such as the vaccine rollout in Germany and France. There is weak support at 1.2478. Below, there is support at 1.2423. Below, there is a pivot point at 1.2556. On the upside, we have resistance at 1.2611 and 1.2689
by OANDA
1
US consumer confidence surges in March to one year highThe consumer confidence index increased to 109.7 in March from 90.4 in February, which beat the economists' forecast at 96.9 Consumers’ assessment of short term outlook on salaries, employment rate and commercial activities increased , with an optimism view on the domestic consumption market MM Analysis The consumer confidence index reached 109.7 in March, which echo with the increased number of University of Michigan Consumer Sentiment Survey. Consumer's optimism derived from 3 main factors. 1. Increased vaccinations, which indicates a rebound on commercial activities 2. Labor market on the mend, i.e. decreasing Unemployment Insurance Weekly Claims, increasing US Non-farm Payrolls, which would boost the retail and personal consumption growth 3. Transfer income from the American Rescue Plan In conclusion, strong consumption confidence and high saving rate would provide a strong support on economic recover, pushing up the US GDP
TVC:DXY
by MacroMicro_Global
The myth of hyperinflation series #6-Consumer debt & consumptionIn my last post, I talked about the liquidity trap (Banks not lending out enough despite being flooded with cash by Fed) . For loans to households, banks tightened standards across all categories of residential real estate (RRE) loans and across all three consumer loan categories—credit card loans, auto loans, and other consumer loans—over the second quarter of 2020. Banks reported stronger demand for all categories of RRE loans and weaker demand for all categories of consumer loans. Despite the massive increase in money supply, there was no visible increase in inflation lvl because the money probably went to equity and housing market. M2 growth percentage was near 10% in 1998, 2001, 2008 and 2011, yet the CPI lvl at those years were 1.6%, 1.6%, 0.1% and 3.0% respectively. Hardly any sign of inflation to me, let alone hyperinflation. US is a retail oriented and consumer-driven/trickle up economy with consumer spending accounts for nearly 70% of the GDP. Therefore, overheated consumer debt, consumption and demand usually precede the high inflation. However, ever since the height of sub-prime mortgage crisis, household debt outstanding, household indebtedness ratio (ratio of household debt outstanding to disposable personal income), household debt service ratio and net borrowing have all declined. The only related measure that has been going up is personal saving rate. In most cases, consumer demand and consumption will not go up fast enough to cause the inflationary risk if personal saving rate goes up or household debt service ratio goes down faster than disposal personal income goes up. Personal saving rate has been unprecedented in recent months and reached peak of 33.5% in April as household income has been lifted by stimulus check while spending opportunities have been restricted. As a result, credit card balances fell by $76 billion in the second quarter, the steepest decline in the history of the data. In total, non-housing balances (including credit card, auto loan, student loan, and other debts) saw the largest decline in the history with an $86 billion decline. According to estimates released by the Bureau of Economic Analysis in June 2020, personal income decreased 1.1percent, real disposable personal income decreased 1.8 percent and real personal consumption expenditures increased 5.2 percent (probably the effect of stimulus check). If stimulus check doesn't keep coming in, it is hard not see consumer spending not being affected as the disposable income drops. Let's take a look at the consumer sentiment- According to the conference board, Consumer Confidence is down 6.9 pts According to the preliminary result of University of Michigan's index of consumer sentiment in July, the score of 73.2 is way lower than that of 98.4 in July 2019. Next, I will examine the producer/supply's relationship with hyperinflation.
FRED:PCEPILFEEducation
by Libratus
2