USD/JPY: Trading the US CB Consumer Confidence Index

2

The CB Consumer Confidence Index provides important readings about consumer confidence and spending, which are critical for economic growth. A higher reading than the market forecast is bullish for the dollar.

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

Published on Tuesday at 14:00 GMT.

Indicator Background

Analysts carefully scrutinize the direction and rate of change of the Consumer Confidence Index, looking for an indication of which direction the economy is headed. As a key indicator, an unexpected reading can affect the direction of USD/JPY.

The index fell to 64.9 points in May, well below the market forecast of 69.8. The June reading calls for another drop, to 69.0 points. Given the host of recent weak US data, a figure below the market estimate could erode confidence in the US economy and hurt the dollar.

Sentiments and levels

With QE3 in the US appearing very unlikely, and the debt and banking crisis in the Euro-zone having a lower impact for the yen, there’s room for more rises after the pair crossed the 80 line. So, the overall sentiment is bullish on USD/JPY towards this release.

Technical levels, from top to bottom: 80.60, 80.20, 80, 79.70, 79 and 78.30.

5 Scenarios  

  1. Within expectations: 66.0 to 72.0: In such a case, USD/JPY is likely to rise within range, with a small chance of breaking higher.
  2. Above expectations: 72.1 to 75.0: An unexpected higher reading can send USD/JPY above one resistance lines.
  3. Well above expectations: Above 75.0: Another sharp increase in consumer confidence could propel the pair above two or more resistance lines.
  4. Below expectations: 63.0 to 65.9: A reading lower than forecast could send USD/JPY below one support level.
  5. Well below expectations: Below 63.0:  A very weak reading would likely push the pair below two or more support levels.

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

Get the 5 most predictable currency pairs

About Author

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.