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Michigan Sentiment Figures Soft

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One of the key tradable figures of the month has just been published out of the US. The Reuters / Michigan Consumer Sentiment Index has come in at 79.9 against a previous months reading of 81.6 and a consensus estimate of 82.0.

This statistic compiled jointly by Reuters and the University of Michigan reflects consumer confidence in the US economy. It is largely interpreted as a willingness of consumers to spend their money and therefore serves as a vital indicator of the strength of domestic demand.

Until this Michigan figure, the US economy had enjoyed a week of neutral to upbeat data releases, the notable exception perhaps being the fall off in the Producer Price Index this morning, at 0.9% this particularly disappointed given last months strong 1.2% reading. Although this number serves as a valid indication towards inflation the market tends to put more weight on the actual Consumer Price Index, this is due next Tuesday.

Despite almost a week of largely positive data releases the US Dollar is stubbornly refusing to react. Heightening Ukrainian tensions should at a minimum contribute to a safe haven lead demand for the Dollar. The currency market’s focus appears to have been elsewhere over the past week, notably the Euro is attracting the lions share of the attention of buying interest, closely followed by the Japanese Yen and the resurgent Aussie Dollar.

The US recovery story is gradually getting itself back on track following a precarious start to the year. No doubt downside risks are weighing on the Dollars appreciation of this fact. This however can be said for many of the recovering developed economies around the world.

The more likely explanation for the reluctance of Dollar buyers goes back to Janet Yellen’s Senate testimony two weeks ago. In this she opened a lot of scope for the Fed to hold off on monetary tightening for quite some time, perhaps even becoming one of the last Central Banks to move, this is causing normal Dollar buyers to examine yield curves elsewhere.

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