US Consumer Confidence Surprises, But Will the Positivity Last?
Yesterday brought a positive surprise in the form of the Conference Board’s August survey on US consumer confidence. Expectations were low, but the index jumped to 103.3, up from July’s 101.9 and well above the forecast of 100.7. A pleasant surprise, no doubt, but there are clouds on the horizon. Signs of a weakening job market suggest this rebound in consumer morale may be short-lived.
On the currency front, it was a relatively quiet day for the major players. However, sterling continued its recent upward trajectory, showing resilience in the face of global uncertainty. The pound gained strength against the dollar, largely due to a surprising move by Federal Reserve Chairman Jerome Powell. In a shift that caught many off guard, Powell signaled his intention to cut interest rates in September—an unexpected turn that added some wind to sterling’s sails.
The Fed had previously taken a more cautious approach, signaling gradual rate decreases. But Powell’s recent speech felt like a “brakes off” moment, suggesting a more aggressive path forward. The market now sees a good chance that the Fed could kick off this cycle with a sizable 50 basis point rate cut—a move that was considered unlikely just days ago.
Looking ahead, today’s economic calendar is fairly light. The main release is Eurozone money supply and loan data for July, with the US macro diary notably quiet. With little in the way of market-moving data, today is unlikely to provide significant direction for the currency markets. All eyes will be on future developments.
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