Search ForexCrunch

The Conference Board Consumer Confidence Index is based on a monthly survey of about 5,000 US households regarding their opinion of economic conditions and the overall economic climate. Its release always has a strong impact on market prices.

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

Published on Tuesday at 14:00 GMT.

Indicator Background

The CB Consumer Confidence Index provides critical readings about consumer confidence and spending. Each month’s reading is carefully scrutinized by analysts and traders looking for an indication of which direction the economy is headed. A higher reading than that forecast by the market  point may strengthen the dollar.

The index has been holding steady at around 45 over the last two months, and little change is anticipated, with a market forecast of 46.2. These low figures reflect continued weak consumer confidence in the US economy.

Sentiments and levels

In Japan, economic indicators continue to signal that the economy is doing poorly. For example, retail sales and consumer spending are down.  The yen has met strong resistance, although the USD/JPY did reach an all-time high. Given the continuing European debt crisis, investors continue to view the yen and the dollar as safe haven currencies. So, the overall sentiment is neutral on USD/JPY towards this release.

Technical levels, from top to bottom: 78.50, 77.85, 77.50, 77, 76.25, 75.95, and 75.

5 Scenarios    

  1. Within expectations: 43.0 to 48.0: In such a case, USD/JPY is likely to rise within range, with a small chance of breaking higher.
  2. Above expectations: 48.1.1 to 52.0: An unexpected higher reading can send USD/JPY above one resistance level.
  3. Well above expectations: Above 52.0: A sharp increase in consumer confidence could propel the pair above two resistance levels or more.
  4. Below expectations: 40.0 to 42.9: A reading lower than forecast could send USD/JPY below one support level.
  5. Well below expectations: Below 40.0: Due to the weak US economy, a sharp decline remains a possibilty. In this outcome, the pair would likely drop below two or more support levels.

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