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US Posts Lowest Consumer Confidence on Record

Tue, Feb 24 2009, 15:28 GMT
by Andrei Pehar

fxKnight.com

 
The US just released a Consumer Confidence reading of 25, the lowest on record (the report has been released since 1967).  This marks a sharp decline from January's reading of 37.4
 
The Consumer Confidence Index is thought to be a leading indicator of consumer spending, with current attitudes understandably negative in light of rising unemployment, large corporate lay-offs, and the difficulty of finding new jobs.
  
The one light at the end of the tunnel is that the Housing Price Index showed an increase to 0.1% (up from a recently revised figure of -2.2%).  It is hoped that stabilization in housing prices would lure buyers waiting in the sidelines.
  
What does this mean for the US Dollar against other major currencies such as the Euro?  The USD has shown amazing strength in recent weeks, though much of that could be coming from increased demand as securities and other assets are sold off, and as we moved to test prior key technical levels.
  
The key level to watch on the EUR/USD pair remains 1.2550 - a break below this support (with a re-test as resistance) would indicate 1.1727 comes into view as a long-term target (with a potential secondary target at 1.0395 if the first fails to hold as support).
  
If, on the other hand, we manage to find some E/U bulls at these levels, then 1.2550 completes our double-bottom pattern, forming since September 2008.  A break above 1.3059 would confirm this, if that level can continue to hold as our new support.  Under such a scenario targets such as 1.3300, 1.3494, and eventually 1.3882 may become viable.

Published on  Tue, Feb 24 2009, 22:41 GMT