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Rosy Consumer Confidence Fails to Boost Greenback

Andre Lapaine August 28, 2018

The US Conference Board Consumer Confidence Index saw a large increase for the month of August, coming in this morning at 133.4, up 5.5 points from 127.9 in July. This is the highest level since October 2000 as consumer confidence regained its strong momentum after the marginal increase we saw in July.

The Present Situation Index, which measures confidence for the current business and labor market conditions, continues to increase month-over-month, with August in at 172.2 compared to July’s level of 166.1.

The DXY US dollar index nudged a bit higher after the release, but was unable to rebound significantly after losses earlier in the session.

August’s Confidence Index seems quite favorable for current market conditions as well as expectations for the remainder of the year. “Overall, these historically high confidence levels should continue to support healthy consumer spending in the near term,” the Conference Board said in its release.

The number of consumers stating business conditions are “good” increased from 38.1% to 40.3%, and those stating business conditions are “bad” decreased from 10.3 in July to 9.1 in August. The confidence surrounding current business conditions is high, and that should continue for the next few months.

The Expectations Index also saw a substantial increase from 102.4 in July to 107.6 this month. This bodes well for consumer spending in the near term, as the Expectation Index declined in both June and July.

The labor market outlook was where sentiment came in mixed. The expectations for more jobs moving forward decreased from 22.6% last month to 21.7% in August, but those anticipating fewer jobs also decreased to 14.1% from 15.2% in July.

Bottom Line: US consumer sentiment remains robust despite all the uncertainties at play in the global economy, including the tensions about trade. Labor market opinions were slightly mixed, but nothing that should put worry businesses and consumers moving forward. As encouraging as the data were, they were unable to spark a move higher by the struggling greenback.

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