- US Consumer Confidence, as measured by CB, is foreseen to improve in February to 108.5.
- Hotter-than-anticipated United States inflation maintains a fragile market sentiment.
- US Dollar Index’s positive momentum could accelerate once above 105.60.
The US Conference Board Consumer Confidence® metric will be released on Tuesday, February 28, and is expected to improve in February to 108.5 from 107.1 in January. The index decreased in January from an upwardly revised figure in December 2022, as consumers positively assessed the current situation but were gloomy about income, business and labor market conditions expectations. The Expectations index currently stands at 77.8, and a reading below 80 often signals a recession within the next year, according to the official report. Finally, it notes that “consumers’ expectations for inflation ticked up slightly from 6.6% to 6.8% over the next 12 months, but inflation expectations are still down from its peak of 7.9% last seen in June.”
Inflation in the United States, as measured by the Consumer Price Index (CPI), has declined sharply ever since peaking at 9.1% YoY in June 2022. That led to speculation the US Federal Reserve (Fed) could ease the pace of monetary tightening and even pivot. However, the latest CPI reading suggests that the pace of slowing pace prices pressure is not enough to put an end to Fed’s adjustments.
Furthermore, on Friday, the US published the January Personal Consumption Expenditures (PCE) Price Index, which rose 5.4% YoY and 0.6% MoM, surpassing expectations. The US Federal Reserve’s favorite inflation gauge, the core PCE Price Index, rose 4.7% YoY, missing the 4.3% expected and higher than the previous 4.6%. As inflation pressures remain high, the US central bank will maintain its tightening path, which in turn, lifts the odds for an economic setback.
USD possible scenarios
Worse-than-anticipated Consumer Confidence will likely fuel recession-related concerns and weigh on the market’s mood, which may lead to US Dollar gains. Monday’s positive mood seems quite fragile, moreover, after US Durable Goods Orders plunged in January by more than expected, down by 4.5% MoM. On the other hand, an upbeat figure should do little to boost the mood, as speculative interest will maintain the focus on higher-than-expected inflation data.
The Dollar Index is approaching its yearly high posted in early January at 105.62. The index has bottomed this year to 100.81, its lowest since April 2022, as the Greenback suffered in the last quarter of the year from speculation the US central bank was about to turn the corner. As the scene changes, so does the DXY trend.
A break through the mentioned yearly high could lead to substantial gains in the near term as the next relevant resistance comes at 107.25. A slide below 103.65, on the other hand, the immediate support area, could result in the DXY falling towards the 102.50 price zone.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
EUR/USD steady below 1.0800 after US PCE meets expectations
EUR/USD remains depressed below 1.0800 after soft French inflation data, amid minimal volatility and thin liquidity on Good Friday. The pair barely reacted to US PCE inflation data, with the Greenback shedding some pips. Fed Chair Jerome Powell set to speak ahead of the weekly close.
GBP/USD hovers around 1.2620 in dull trading
GBP/USD trades sideways above 1.2600 amid a widespread holiday restraining action across financial markets. Investors took a long weekend ahead of critical United States employment data next week. Fed Chair Powell coming up next.
Gold price sits at all-time highs above $2,230
Gold price holds near a fresh all-time high at $2,236 in thinned trading amid the Easter Holiday. Most major world markets remain closed, although the United States published core PCE inflation, the Federal Reserve’s favorite inflation gauge.
Jito price could hit $6 as JTO coils up inside this bullish pattern
Jito (JTO) price has been on an uptrend since forming a local bottom in early January. Since then, JTO has revisited the key swing point formed in early December, suggesting the bulls’ intention to move higher.
Key events in developed markets next week
Next week, the main focus will be inflation and the labour market in the Eurozone. We expect services inflation to be impacted by the easter effect, while the unemployment rate to be unchanged.