CB Consumer Confidence in Focus Today

CB Consumer Confidence in Focus Today

The United States (US) CB Consumer Confidence is expected to have extended its decline in September after trimming June and July gains in August. The index, which reflects prevailing business conditions and aims to predict what will happen in the upcoming months, is foreseen at 105.5 in September.    

Back in August, the Present Situation sub-index fell to 144.8 from 153.0 previously, while the Expectations Index declined to 80.2 after printing 88.0 in July. On a positive note, the index held above 80, suggesting the risk of a recession decreased. Nevertheless, the official report noted that “although consumer fears of an impending recession continued to recede, we still anticipate one is likely before year-end.”

Investors will be looking for clues about consumer confidence levels and pay attention to the Expectations Index as if the latter remains above 80, a worse-than-anticipated headline reading will have a lesser impact on financial markets. Furthermore, the US will release the August Personal Consumption Expenditures (PCE) Price Index next Friday, the Fed’s favorite inflation reading, and speculative interest will likely await the figures for a steeper directional compromise.

The EUR/USD experienced volatility on Monday, touching a high of $1.06556 and a low of $1.05751, eventually closing the day with a 0.49% fall at $1.05930,

ECB commentary has been hawkish despite concerns about a euro area recession. On Monday, ECB President Lagarde supported the higher-for-longer interest rate path to tame inflation.

The increasing risk of a euro area recession, fueled by the ECB, leaves the EUR/USD on the back foot.

ECB Chief Economist Philip Lane will guide the EUR. Lane speaks at a Joint European Central Bank – Banque de France – Centre for Economic Policy Research Conference.

The EUR/USD will be sensitive to economic and inflation outlooks, even though investors could stomach the higher-for-longer mantra. There is also the threat of the Chief Economist supporting further rate hikes.

However, German, French, and Eurozone inflation figures will be in focus this week. A marked softening in inflation pressures could ease pressure on the ECB to maintain interest rates for higher and avoid a hard landing.

With consumer confidence in focus today, FOMC member commentary also needs consideration. Dovish FOMC comments about the economy and monetary policy would fuel buyer appetite for the EUR/USD.

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