USD/JPY:Trading the UoM Consumer Sentiment September 13 2012

USD/JPY:Trading the UoM Consumer Sentiment September 13 2012

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 a reading that  is higher than  forecast is bullish for  the US dollar.

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

Published on  Friday at 13:55 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 figures for the previous release came in at 73.6 points, beating the market estimate of 72.5 points. The September estimate stands at 74.1  points. Will the consumer indicator meet or beat the improved forecast?

Sentiments and levels

The  yen has  enjoyed a superb  September rally against  the dollar, as USD/JPY has reached a seven-month high. But will this momentum continue?  QE3 would certainly be bearish for the greenback, but the red-hot yen will likely cool off if Bernanke disappoints yet again.  Eithe way, the BOJ  is feeling pressure to  push down the yen and give  Japanese exports some relief.  So, the overall sentiment is  neutral on USD/JPY towards this release.

Technical levels, from top to bottom: 79.05, 78.80, 78, 77.50, 77, and 77.60.

5 Scenarios

  1. Within expectations: 70.0 to 78.0: In such a case, USD/JPY is likely to rise within range, with a small chance of breaking higher.
  2. Above expectations:  78.1 to 82.0: An unexpected higher reading can send the pair above one resistance line.
  3. Well above expectations: Above 82.0: The chances of such a scenario are low.  Two or  more resistance lines could be broken on such an outcome.
  4. Below expectations: 66.0 to 69.9: A poor reading could push down on the pair, and  one  support level could be broken.
  5. Well below expectations: Under 66.0: A sharp  drop in consumer confidence will  likely hurt the dollar, and USD/JPY could break two or more  support levels.

For more on the yen, see the  USD/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.