With Consumer Confidence at a 4+ year high and the present Christmas season, it is likely household spending will increase in the coming months.
It was early 2008 that the U.S. has seen Consumer Confidence ratings so high.
The confidence index reached the 73.7 figure Tuesday after a revised figure of 73.1 from the prior month’s report.
“Confidence is holding up well,” said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York, he estimated that consumer confidence would rise to 74. “Spending is going to continue to increase. This bodes well for the fourth quarter.” (Bloomberg)
It is possible that the good numbers are an after shock of the significant amount of positive data released this fall such as the unemployment rate being below 8%. Also, with a presidential election taking place and Fed easing, some people may have an optimistic look for the future.
Shifting gears; one thought I have is “do we see the fiscal cliff?”. Are we numb to the reality of it already? Has it already become a cliche? The human tendency to look the other way when we see negative things approaching is very destructive. Is the fiscal cliff creating some kind of inner Risk Aversion thought process that believes the U.S. economy is invincible?
Please read this article on the U.S. Fiscal Cliff.
It’s possible that the USD will be bullish in the coming months. Whether lots of good news or lots of bad news, I think the USD could see substantial gains. With very negative news, Risk Aversion would likely kick in.
To read more about the Fiscal Cliff Pressure, visit this link.
Wednesday’s Home Sales
U.S. home sales declined today, surprising economists. Sales dropped to the pace of 368,0000. The median prediction of 74 economists surveyed by Bloomberg expected a 390,000 pace to be announced today.
Also worth noting, the unemployment claims forecast for Thursday is at a high 404K. Diversion from this forecast could bring volatility to the EUR/USD tomorrow, along with other Dollar-based pairs.
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