US consumer sentiment data to pick up, good for US growth and the dollar – ING

The highlight of today's relatively quiet session will be US August consumer sentiment data. In the view of economists at ING, cheaper gasoline should help US confidence and the dollar.

Rising consumer confidence should be good news all around

“We look for an upside surprise in consumer sentiment after US gasoline's fall to $4 from $5/gallon over the last month. We also get fresh inflation expectations data. How will markets read the data? A drop in inflation expectations may suggest the Fed can be more relaxed on inflation. But there are no signs of that coming through in its rhetoric. Instead, the bigger impact may be the bounce in consumer sentiment, reduced fears of a 2023 recession, and the pricing out of some of the 50 bps of easing expected in 2H23. This should be a dollar-positive development.”

“Heavily weighted to the low yielders, DXY should be able to edge a little higher today. A break above 105.50 would go a long way to stabilising it after the heavy losses suffered on Wednesday's US CPI release.”