THE TAKEAWAY: [US March Consumer Confidence drops more than forecast ] > [Recovery is not stable, may be too soon to cheer] > [USD/JPY Bearish]
The confidence among U.S. consumers declined more than expected in March amid concerns on potential government spending which drags on the recent progress in the labor market. The confidence index dropped to 59.7 following a revised gauge of 68.0 from 69.6 originally reported in previous month. 79 economists surveyed by Bloomberg had projected a median estimate of 67.5. Another report today showed that US New Home Sales fell in February by 4.6 percent following a revised gain of 13.1 percent in January according to the Commerce Department in Washington.
Yesterday Fed's Dudley said during a speech that it was "too soon to take much cheer" from the recent economic releases. The worse-than-expected reports released today indicate that developments in one or two months may not be enough to signal a stable recovery of the US economy. Fed’s Chairman Bernanke emphasized last week during his press conference that Fed was seeking for “sustained improvements in economic indicators and momentum signs” and would adjust monetary easing policy accordingly.
USDJPY 1-minute Chart: March 26, 2013
Chart created using Market Scope – Prepared by Renee Mu
In the minutes following the reports released, the U.S. dollar dropped against its major currencies, falling 10 bps versus Japanese Yen to 94.26. At the time of this report written, the USD/JPY was trading at 94.23.
--- Written by Renee Mu DailyFX Research