EUR/USD – Bad and good to be found in US Consumer Confidence

on Jul 30, 2013

**, Tuesday 30 July:** US Consumer Confidence was today reported as 80.3, falling short of analysts’ estimates for 81.0 and June’s 82.1, revised up from 81.4.

The recent spike in mortgage rates and oil prices have negatively impacted on consumer sentiment, with the 6.4 percent drop in the expectations component reflecting a lack of confidence generally and in the outlook for the jobs market.
Better news lay in the strong gain in the present situation component of the index, a measure of confidence month-to-month, which was up sharply by nearly 5 points to 73.6. A further positive note, not measured in the headline index, was heightened strength in buying plans. More consumers expect to buy a home in the next six months as well as a vehicle.

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The initial reaction to the release was a 0.43 percent slump for the euro to 1.3234 in a matter of minutes as the risk-off trade gained traction. The single currency retraced to 1.3257 in the following half an hour as some traders spotted a noise move, with US consumer confidence historically positively correlated with the dollar.
One of the year’s eight scheduled two-day meetings of the Federal Open Market Committee started today, with a statement due out 19.00 BST tomorrow.


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