US Consumer Confidence, US Dollar, Russia, Ukraine – Talking Points
- U.S Consumer confidence 107.2 (Est. 107, previous 110.5)
- US Dollar Index falls on the strength of the euro, 98.00 tests imminent
US consumer confidence recovered marginally in March as consumers remain optimistic about the economy despite ongoing inflation. Despite beating Wall Street estimates, the printout represents a drop from February’s reading of 110.5. Household sentiment may remain under pressure as energy prices remain elevated, while the conflict between Russia and Ukraine also continues to weigh on global sentiment. Perhaps strikingly, consumers were remarkably optimistic about current business and labor market conditions.
With consumer confidence continuing to decline, it will be interesting to see how the Federal Reserve’s tightening path could develop given the underlying data. Concerns could also arise from an inverted yield curve, with the spread from 2 to 10 getting uncannily close to negative. While Fed Chair Jerome Powell indicated he is not religiously monitoring the 2s-10s spread, the market’s favored recession indicator is about to send out warning signs.
2s-10s Spread Weekly Chart (US Treasuries)
Chart created with TradingView
The US Dollar Index has been under pressure for most of Tuesday’s session as EUR/USD continues to rise higher following recent developments in the Russia-Ukraine negotiations. The Russian delegation revealed that they would end military operations near Kiev and Chernihivi, but they did not indicate that the operations would stop. After finding resistance again in the area of 99.30, the Dollar Index is back below 99.50. The price may bottom around 98.97, which represents the 0.618 Fib retracement from the January 2017 to February 2018 sell-off.
US Dollar Index 1 Hour Chart
Chart created with TradingView
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— Written by Brendan Fagan, intern
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