Tuesday, 29 Sep 2009

US Consumer Confidence Falls before Holiday Season

It appears as if another bleak report has dampened the recent surge in market optimism regarding the potential for an economic recovery. The Conference Board's report on consumer confidence actually shrank to a reading of 53.1, lower than last month's 54.5, and well beneath the expected rise towards 57.0. Coming just before the onset of the holiday season in the United States, this information does not bode well for the prospects of a speedy recovery.

As a result of this consumer confidence report, safe-haven assets such as the US Dollar made modest gains throughout today's trading. A slump in the stock market also indicted a flight away from riskier assets. The Japanese Yen was also expected to continue strengthening following Japanese Finance Minister Fujii's comments about not intervening in the JPY's recent movements, yet the island currency traded slightly lower against a number of its rivals throughout the day regardless of this sentiment. Traders are still anticipating this Friday's US Non-Farm Payrolls data, which always carries a deep and lasting impact on the USD's trends for the week which follows.

- The chart above is the hourly chart for the EUR/USD.

- The indicators used are the Slow Stochastic and William's Percent Range.

- Point 1: There is a clear bearish channel in this pair and there does not seem to be any signal of a breach to this trend, suggesting a continuation in the USD's strength.

- Point 2: The Slow Stochastic shows a bearish cross, which indicates that the next movement may likely be a downward correction to the latest upward move.

- Point 3: The William's Percent Range shows a reading in the pure neutral territory, highlighting the lack of clear pressure in this pair. Which also suggests that the recent downtrend may continue.