Impact on the GBPUSD price outlook
GBP/USD is trading just below the 1.29 level following the release of the Conference Board US Consumer Confidence survey. Cable has benefited from the disappointing US consumer data, although the market is focused elsewhere, mainly on Brexit-related political developments and tomorrow’s Fed meeting.
– GBP/USD on the rise, eyes 1.29 as UK snap election gains traction.
– CB US Consumer Confidence drops slightly to 125.9 in October.
– Traders focus on tomorrow’s Federal Reserve interest rate decision.
The GBP/USD pair is surging to close-to-1.29 levels after a weak US consumer data release. The pair started the European session on the wrong foot as political uncertainty mounted in the UK but recovered to 1.2860 after the UK snap election gained traction following Labor party’s leader Jeremy Corbyn's support for it. The cable is has made three-day highs in the minutes following the Conference Board Consumer Confidence release, which printed a solid but disappointing 125.9 level.
The CB consumer survey has been retracing now for four consecutive months, although it is still performing above the meaningful 120 level.
Impact on FED future decisions: Consumer sentiment and the Federal Reserve
The US central bank is expected to reduce its base rate by 25 basis points for the third time this year at Wednesday’s meeting. The futures markets rate the odds of a cut at 93.0%.
Consumer attitudes are in the center of the Fed’s concerns about the US economy. The stagnation of both the Conference Board and the University of Michigan consumer surveys in the last months might weigh on the Fed’s assessment of the US economy’s health. Odds of further rate cuts this year and next might be on the rise if this stagnation continues in the following months.
Pound Dollar expectations: Traders eye on Brexit, Fed meeting and NFP
The pound is ignoring most of the British macroeconomic data and only moving through UK political developments. On the other side, the US dollar is awaiting Wednesday’s Fed decision, with also the US Gross Domestic Product Q4 first release on the way tomorrow, so Consumer Confidence, even if important, has less meaningfulness this time around.
Impact on EURUSD price
EUR/USD is also gaining ground as the US dollar is sold-off following the mediocre US data release, having breached the 1.11 mark.
Non-Farm Payrolls leading indicators: Negative signals dominate the lead-out to NFP
The Conference Board Consumer Confidence survey provides another negative signal for the Non-Farm Payroll report, to be released next Friday, November 1st. Out of the six leading indicators released up-to-date, CB Consumer Confidence is the fifth negative signal, rounding out quite a pessimistic outlook for the US jobs report. The US dollar is being sold-off ahead of the leading indicators yet to be released before Friday’s US labor market report. Take a look at how red looks NFP leading indicator table:
US jobs report pre-release checklist – Nov 1st, 2019
September Consumer Confidence Index Report
US: CB Consumer Confidence Index dropped to 125.1 in September vs. 133.5 expected
According to the monthly report published by the Conference Board, consumer confidence in the US deteriorated in September with the Consumer Confidence Index slumping to 125.1 in September and missing the market expectation of 133.5.
Background: Why we care about the Consumer Confidence Index?
The Consumer Confidence Index is an economic indicator published by The Conference Board led by Steve Odland as President and Chief Executive Officer. The main aim of this economic indicator is to measure consumer confidence. Each month The Conference Board conducts 5.000 surveys asking for aspects like business conditions, employment conditions and family incomes. This consumer sentiment survey allows analysts to understand the expectations of consumers based on their economic circumstances.
This indicator not only impacts directly on currencies and stock prices but also could affect some decisions taken by The Federal Reserve of the United States. Decreasing consumer confidence is a sign of slowing economic growth. As mentioned before the previous September report dropped to 125.1 missing the market expectations of 133.5 causing an initial market reaction on the Greenback and some other major currencies.
Related Links:
Conference Board Consumer Confidence Index page
Recommended content about CCI and EURUSD:
US: CB Consumer Confidence Index (CCI) dropped to 125.1 in September vs. 133.5 expected
US Conference Board Consumer Confidence Preview: The FOMC is watching the consumer
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