Home USD/JPY: Trading the Michigan Consumer Sentiment September 2011

USD/JPY: Trading the Michigan Consumer Sentiment September 2011

The University of  Michigan Consumer Sentiment Index surveys consumer attitudes and expectations about the US economy. An increase in consumer confidence is a positive sign about the health of the economy and can help strengthen the US dollar.

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

Published on  Friday at 14:00 GMT.

Indicator Background

The University of Michigan Consumer Sentiment index, which is released monthly, is an important leading economic indicator. It helps measure future spending behavior, and provides an indication of consumer confidence in the economy. Analysts look to the index to help answer that all-important question of “is the US consumer optimistic or pessimistic about the economy”?

The last three releases of the index have all been below expectations. The forecast for August reading was 63.2, but the actual reading came in at a disappointing 54.9. The forecast for September is 54.9, so consumer confidence seems to be holding steady, although it is well below the figures we saw in Q1 and Q2.

Sentiments and levels

The Japanese economy is limping along, and major economic indicators, such as business confidence and industrial production, have been well below market expectations. With the Greek debt crisis threatening to push down the Euro, the dollar is again becoming a safe haven currency. So, the overall sentiment is bullish on USD/JPY towards this release.

Technical levels, from top to bottom: 78.20, 78.75, 77, 76.25, 75.95 and 75.

5 Scenarios

  1. Within expectations: 48.0 to 60.0: In such a case, USD/JPY is likely to rise within range, with a small chance of breaking higher.
  2. Above expectations: 60.1 to 68.0: An unexpected higher reading can send the pair well above one resistance level.
  3. Well above expectations: Above 68.1: The chances of such a scenario are low. A second resistance line or more might be broken on such an outcome.
  4. Below expectations: 41.0 to 47.9: A poor reading could push USD/JPY downwards, and one support level could be broken.
  5. Well below expectations: Under 41.0: A severe loss of consumer confidence will hurt the dollar, and the pair could break two support levels.

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

Kenny Fisher

Kenny Fisher

Kenny Fisher - Senior Writer A native of Toronto, Canada, Kenneth worked for seven years in the marketing and trading departments at Bendix, a foreign exchange company in Toronto. Kenneth is also a lawyer, and has extensive experience as an editor and writer.