THE TAKEAWAY: [U.S. consumer confidence unexpectedly jumps to four month high in September] > [Likely to boost household spending and dampen scope for additional Fed easing] > [USD bullish]
Confidence among U.S. consumers unexpectedly surged in September to a four month high, signaling a possible boost to consumer spending in coming months. The preliminary monthly reading of the Thomson Reuters / University of Michigan Confidence Index (MCSI) far surpassed economist expectations, as it soared to 79.2 in September from 74.3 the previous month. The median forecast of 71 economists surveyed by Bloomberg news had projected a decline in the sentiment gauge to 74.0.
Recent improvements in home prices and rising stock prices have lifted consumer sentiment, even as soft labor conditions and stagnant wage growth persist. The pickup in confidence has been reflected in a rise in spending, and should continue to boost household spending, which makes up about 70 percent of the U.S. economy, in the next few months.
EURUSD 1-minute Chart: September 14, 2012
Chart created using Market Scope – Prepared by Tzu-Wen Chen
The U.S. dollar continued to rally higher against the euro in the minutes after the release of the better-than-expected confidence data. The surge in consumer sentiment is likely to boost household spending, dampening scope for additional monetary easing by the Federal Reserve. At this time this report was written, the EURUSD pair was trading at $1.3161.
--- Written by Tzu-Wen Chen, DailyFX Research