The Conference Board’s consumer confidence gauge dropped from the record high of 72 points, but still remains high at 63.4 points . This key survey always rocks the dollar.
Expectations were for a small drop. Early expectations stood on a drop to 64.9. But while the result falls short of expectations, it is still very high. Note that last month’s figure was revised from 70.4 to 72 points.
The survey of 5,000 consumers made huge leaps in recent months. It jumped from the low 50s at the fourth quarter of 2010 to 64.8 points in January and to 72 in February.
This indicator is always of high importance for several reasons: the survey is wide, reliable, released very quickly (the current month) and serves as a great gauge for the Non-Farm Payrolls, that are released a few days afterwards. Both figures relate to the same month. In this case, March.
Earlier, the dollar got a boost from hawkish comments by James Bullard, a key member of the Federal Reserve, that hinted about exiting the stimulus actions, and normalizing conditions. This gave a boost to USD/JPY, which broke to pre-earthquake levels.
The dollar also gained against the Euro. Here, there are several additional reasons for the Euro’s drop apart from Bullard: S&P downgraded Portugal and Greece once again, as the debt crisis worsens in Europe. This consists of Greece and Ireland which already received bailouts, Portugal which has an imminent bailout coming, and Spain, which has its own banking troubles and is marked as the “next dominoâ€.
EUR/USD now trades at 1.4070, significantly lower than the 1.4140 levels seen early in the day but still above the all important 1.4030 support line.
For more on EUR/USD, see the Euro/Dollar forecast.
