By Orbex
Yesterday’s US Consumer Confidence number noted a record drop over April. The data further continued the recent theme we have seen among economic data. The headline index reading fell from 118.8 last to 86.9 in April. This was below the 88.3 number forecast and marked the lowest level since 2014.
The reading is a firm indication of the drop in sentiment among US consumers. The nation has been under lock-down for the last month.
While the breakdown of the data reflected how poorly the US consumer views the current conditions, there were some signs of optimism.
The Present Situation Index declined from 166.7 last to 76.4 over April, a bleak reading. However, the Expectations Index actually registered a small improvement rising to 93.8 from 86.8 in March. This measure is based on the consumer outlook for income, business, and labor market conditions. Therefore, an increase here is encouraging for the recovery which is now starting to move into focus as the US plans to re-open parts of the economy.
The Senior Director of Economic Indicators at the Conference Board (which collects the data) said:
Free Reports:
“Consumer confidence weakened significantly in April, driven by a severe deterioration in current conditions.”
He further added:
“The 90-point drop in the Present Situation Index, the largest on record, reflects the sharp contraction in economic activity and surge in unemployment claims brought about by the COVID-19 crisis. Consumers’ short-term expectations for the economy and labor market improved, likely prompted by the possibility that stay-at-home restrictions will loosen soon, along with a re-opening of the economy.
“However, consumers were less optimistic about their financial prospects and this could have repercussions for spending as the recovery takes hold. The uncertainty of the economic effects of COVID-19 will likely cause expectations to fluctuate in the months ahead.”
The US has now begun the long road to economic recovery with many states beginning to ease lockdown restrictions. Georgia, Oklahoma, Alaska, and South Carolina have already reopened some businesses. They are planning to further open parts of the local economies in the coming weeks.
However, the US is far from out of the woods with the country suffering its largest one day spike in new infections on Friday of last week. As of the start of this week, over 50,000 people have died from the virus in the US, with more than one million infections.
Citizens and markets alike will now have to wait and see what the implications of these reopening procedures are and whether the US falls victim to a second wave of the virus.
While the USD Index remains in the small contracting triangle pattern which has framed recent price action, the latest dip found support at a retest of the key 99.68 level. While price holds above here, focus remains on further upside and an eventual break higher.
To the downside, any break lower will turn focus onto the 98.85 support level next with the triangle low coming in just above it.
By Orbex
