Forex: US Dollar Rally May Not Find Fuel in Consumer Confidence Data

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Talking Points:

US Dollar May Not Find Upside Driver in Firming UofM Consumer Confidence
Aussie, NZ Dollars Followed China’s Shanghai Composite Lower in Asian Trade
Pound Soared as UK Retail Sales Unexpectedly Grew the Most in Over 5 Years

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The US Dollar lost a bit of momentum yesterday following the release of US CPI and Jobless Claims data, as expected. The former report printed in line with expectations while the latter offered something of a mixed message. On balance, these results did little to dislodge the emerging status quo in investors’ Fed policy expectations, opening the door for corrective profit-taking in the context of the greenback’s gains since the beginning of the week.

Looking ahead, the spotlight is on the preliminary estimate of January’s University of Michigan gauge of US Consumer Confidence. Expectations call for a pickup in sentiment, with the index seen rising to a six-month high of 83.5. A print broadly in line with expectations is likely to be treated as reinforcing established QE “taper” bets and may see the Dollar correcting lower as the rally from earlier in the week continues to be digested. Indeed, it would probably take a particularly strong upside surprise to reignite upward momentum in the benchmark currency into the final hours of the trading week.

The New Zealand and Australian Dollars underperformed in overnight, following China’s benchmark Shanghai Composite stock index lower. The British Pound outperformed after UK Retail Sales unexpectedly soared 2.8 percent in December, beating expectations calling for a meager 0.3 percent increase and marking the last monthly increase in over five years.

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Asia Session:

GMT	CCY	EVENT	ACT	EXP	PREV
5:00	JPY	Consumer Confidence Index (DEC)	41.3	43.2	42.5
5:30	JPY	Nationwide Dept. Store Sales (YoY) (DEC)	1.7%	-	2.4%
5:30	JPY	Tokyo Dept. Store Sales (YoY) (DEC)	3.6%	-	3.9%

Euro Session:

GMT	CCY	EVENT	EXP/ACT	PREV	IMPACT
8:15	CHF	Producer & Import Prices (MoM) (DEC)	0.0% (A)	-0.1%	Low
8:15	CHF	Producer & Import Prices (YoY) (DEC)	-0.4% (A)	-0.4%	Low
9:30	GBP	Retail Sales ex Auto (MoM) (DEC)	2.8% (A)	0.4%	Medium
9:30	GBP	Retail Sales ex Auto (YoY) (DEC)	6.1% (A)	2.3%	Medium
9:30	GBP	Retail Sales incl. Auto (MoM) (DEC)	2.6% (A)	0.3%	Medium
9:30	GBP	Retail Sales incl. Auto (YoY) (DEC)	5.3% (A)	2.0%	Medium
10:00	EUR	Euro-Zone Construction Output (MoM) (NOV)	-0.6% (A)	-1.2%	Low
10:00	EUR	Euro-Zone Construction Output (YoY) (NOV)	-1.7% (A)	-2.4%	Low

Critical Levels:

CCY	SUPP 3	SUPP 2	SUPP 1	Pivot Point	RES 1	RES 2	RES 3
EURUSD	1.3484	1.3551	1.3585	1.3618	1.3652	1.3685	1.3752
GBPUSD	1.6215	1.6283	1.6318	1.6351	1.6386	1.6419	1.6487

--- Written by Ilya Spivak, Currency Strategist for DailyFX.com

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Forex: US Dollar Rally May Not Find Fuel in Consumer Confidence Data

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