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No Confidence as Consumer Sentiment Hits 3 Month Low

Last updated 10/27/2009 10:30 AM ET (GMT -5) 5 Comments

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Boris Schlossberg

Director of Currency Research, GFT

US Consumer Confidence plunged to 47.7 versus 53.1 projected with current expectations component slumping to a 26 year low. Persistent fears of job losses have dampened   consumer sentiment which in turn could result in a weaker than expected Christmas shopping season reducing growth estimates for Q4.

This was the first decline in 3 months for the consumer confidence report indicating that despite a pickup in overall economic activity  consumers are becoming increasingly concerned about their personal  prospects.

We noted earlier that “Given the miss in U of Michigan numbers and the stall in the rate of improvement of weekly jobless claims, the possibility of downward surprise remains strong. A miss on the data could spur further risk aversion in equities and pull EUR/USD down to a test of 1.4800 as correction in the recovery trade looks likely to continue.”

With EUR/USD having taken out the 1.4800 the pressure to downside could continue for the rest of the day as the market begins to realize that the recovery scenario priced into the current levels of risk assets may be overly optimistic. Tomorrow’s Durable Goods number will now become the next critical test of US economies’ health  and could determine if the correction in risk FX persists for the rest of the week an perhaps beyond.

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Comments (5)

spunky

October 27, 2009 at 11:31 AM ET

In my own part of the world, rural southern Indiana; I just refied my house, closed last week. My appraisal was within 800$ of the one I had done in 2003. I work in health care as a Registered nurse; jobs that could be had anywhere with no experience have closed up, most place want 2-5yr experience. I am only getting a cost of living raise every year; if that.

The working folk see only gas prices, their homes worth , and their paychecks, and they need to buy gasoline and groceries.

The relationship of the stock market and overall health of america people is way overblown; this is a weak dollar, business cost cutting rally

Still made some easy nice pipage this am once the stops got ran at 1.4800 post news release.
Good luck to all; should be some nice trading next 48hrs

Vstocks

October 27, 2009 at 02:20 PM ET

Hi Boris,
Kudos to your call on USD/JPY last week, where do you think it goes from hear if equities correct further?
Spasibo!

bschlossberg

October 27, 2009 at 04:35 PM ET

Its trading more on yields these days so it can higher

sean

October 27, 2009 at 07:07 PM ET

Thanks for telling me how to interpet the consumer confidence reading. I booked 50pips following your advice.

bschlossberg

October 28, 2009 at 02:18 AM ET

Great! So glad you are enjoying our analysis.

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About The Author

Boris Schlossberg began his Wall Street trading career more than 20 years ago at Drexel Burhnam Lambert. There, he traded nearly every type of financial product on the market in the U.S., from equities and options to stock index futures and foreign exchange. His innate ability to analyze market information and use it to trade has helped him become an industry-recognized, “go to” trading professional.

These days, whenever the markets move, many organizations turn to Schlossberg for his take on the situation. He is a weekly contributor to CNBC's Squawk Box and a regular commentator for Bloomberg radio and television. His daily currency research is widely quoted by Reuters, Dow Jones and Agence France Presse newswires and appears in numerous newspapers worldwide. Schlossberg has written for publications like SFO magazine, Active Trader and Technical Analysis of Stocks and Commodities. He is also the author of Technical Analysis of the Currency Market and the co-author of Millionaire Traders: How Everyday People Are Beating Wall Street at Its Own Game with Kathy Lien. He joined GFT in 2008.