USD/JPY: Trading the Conference Board Consumer Confidence Index

The Conference Board Consumer Confidence Index is based on a monthly survey of about 5,000 households regarding their opinion of the economy. Traders should pay close attention to this release, as it  usually a market-mover.

Here are all the details, and 5 possible outcomes for USD/JPY.

Published on Tuesday at 15:00 GMT.

Indicator Background

The CB Consumer Confidence Index provides critical readings about consumer confidence and spending. The index’s direction and rate of change are carefully scrutinized by analysts and traders looking for an indication  as to the  health the economy. A higher reading than the market forecast is bullish for the dollar.

Considering the volatility in the index, the markets have done a good  job in making predictions which are uually close to the actual reading.  November’s  figure, however, proved to be a glaring  exception to this rule. The index came in at a sizzling 56.0, sharply  up from the October reading of 39.8, and well above the market forecast of 43.9. The markets have adjusted their prediction accordingly, setting a December forecast of 58.5. Will the index again beat the market’s expectation?

Sentiments and levels

In the long run, the improving US economy should push the pair higher. However, the pair has been stuck in range trading for most of December, as the yen has managed to hold its own against a surging US dollar.  The  narrow trading band  will likely continue during the holidays,  so the overall sentiment is neutral on USD/JPY towards this release.

Technical levels, from top to bottom: 80, 79.50, 78.30, 77.50, 77, 76.75, and 76.25.

5 Scenarios    

1. Within expectations: 54.0 to 63.0: In such a case, USD/JPY is likely to rise within range, with a small chance of breaking higher.
2. Above expectations: 63.1 to 68.0: An unexpected higher reading can send USD/JPY above one resistance level.
3. Well above expectations: Above 68.0: A sharp increase in consumer confidence could propel the pair above two resistance levels or more.
4. Below expectations:  50.0 to 53.9: A reading lower than forecast could send USD/JPY below one support level.
5. Well below expectations: Below 50.0: If consumer confidence takes a sharp drop, the pair would likely  fall  below two or more support levels.

For more on USD/JPY, see the USD/JPY forecast.