Consumer Confidence, US Dollar, Recession Talking Points:
- Consumer Confidence shows record drop on COVID-19 impact
- US Dollar remains under pressure as pandemic lockdowns begin to ease
- Week ahead is packed with economic data, including Q1 US GDP
Consumer confidence recorded the largest drop on record Tuesday morning as the figure from the Conference Board crossed the wires at 86.9, down from the previous print of 118.8 from March. The sharp drop in consumer confidence underscores the dramatic impact from COVID-19, resulting in over 26 million jobs lost in the US economy over the past 5 weeks. US Dollar price action remains under pressure post-release. The greenback failed to break above resistance on Friday and pushed lower this Monday.
US Dollar Basket Chart (1-Min)
Source: IG Charts
The current conditions figure, a major component within the consumer confidence survey, deteriorated further for April with 45.2 percent of respondents claiming business conditions are “bad,” up from 11.7 percent. Current conditions for the labor market were also worsened. 20.8 percent of respondents are expecting fewer jobs in the coming months, up from 17.6 percent.
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While the headline figure reflects a deterioration in current sentiment – the expectations index, based on the short-term outlook for income, business, and labor market conditions – ticked up to 93.8 for April from 86.8. Business conditions are expected to improve over the next six months according to 40 percent of those surveyed, up from 18.7 percent. US equity markets appear to be pricing in improving economic conditions along with consumers recently. The Nasdaq is leading the pack among the three major US baskets, and the tech-heavy index will report earnings from Apple, Amazon, Microsoft, Google, and Facebook this week.
Outside of earnings, the week is far from over. Heavy-hitting economic data prints will continue later this week, with the United States advance reading for Q1 due out Wednesday morning. Expectations currently call for a 4 percent contraction in US economic activity on an annualized rate for the first quarter. This drop would end the record expansion in the United States. We will also get a Fed rate decision and PMI manufacturing data out of China.
–Written by Thomas Westwater, Contributor for DailyFX.com
Contact and follow Thomas on Twitter @FxWestwater