US Dollar Outlook:
- The preliminary February US Michigan consumer sentiment survey missed expectations considerably, falling to its lowest reading since November 2011.
- Inflation expectations remain tilted higher, both for the 1-year ahead and 5-year ahead readings.
- According to the IG Client Sentiment Index, the major USD-pairs collectively have a mixed bias at the end of the week.
Big Miss, Multi-Year Lows
The US Dollar (via the DXY Index) holding steady following a disappointing round of US consumer confidence figures. The preliminary February US Michigan consumer sentiment survey missed expectations considerably, falling to its lowest reading since November 2011. Rising gas prices and generally high inflation pressures are weighing on consumers, even though wage growth for the lowest tercile remains positive in real terms.
The data may prove to be less of a problem for financial markets and more for the Biden administration has the calendar creeps closer to the US Congressional midterm elections this fall.
Here are the data driving the US Dollar this morning:
- USD Michigan Consumer Sentiment (FEB P): 61.7 actual vs 67.5 expected, from 67.2
- USD Michigan Consumer Expectations (FEB P): 57.4 actual, from 64.1
- USD Michigan Current Conditions (FEB P): 68.5 actual vs 73 expected, from 72
- USD Michigan Inflation Expectations (FEB P): 5% actual, from 4.9%
- USD Michigan 5 Year Inflation Expectations (FEB P): 3.1% actual, from 3.1%
See the DailyFX Economic Calendar for Friday, February 11, 2022.
DXY INDEX TECHNICAL ANALYSIS: 5-MINUTE PRICE CHART (February 10-11, 2022) (CHART 1)
Following the sentiment survey, the US Dollar continued to trade sideways as it had been around the US cash equity open. Overall, the DXY Index is up around +0.03% on the session, taking a breather after yesterday’s gains on the back of the sharp rise in short-end US Treasury yields; the 2-year yield has notched its largest single-day gain in 12 years.
— Written by Christopher Vecchio, CFA, Senior Strategist