US Dollar Gyrates on Downbeat Consumer Sentiment, Virus Injects Worry

Consumer Sentiment Talking Points:

  • USDJPY uptick quickly beat down as virus fears show face in the U.Mich sentiment data
  • Sentiment data falls to 95.9 in March, previously at 101.0
  • Data shows further declines are possible as virus fears continue to spread

Friday morning brought the release of the University of Michigan’s consumer sentiment survey with the headline figure crossing the wires at 95.9, beating expectations of 95.0, but falling sharply from February. USDJPY saw a brief uptick as the figure crossed the wires but was quickly beat down to pre-release levels.

USDJPY (1-Min Chart)

Source: IG

This follows weeks of volatility in the US Dollar and strength through recent days, a likely result from tightening liquidity conditions. Virus fears weighed in the survey and show that continued declines are likely. A huge influx of volatility hit markets in recent weeks as coronavirus fears continue to permeate through investors. This unusual bout of volatility sent the Dow Jones and S&P 500 into bear market territory on Thursday’s closing bell, ending the 11 -year bull market.

Michigan Sentiment

Source: Bloomberg

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The underwhelming sentiment data will be another factor to weigh when judging market sentiment in coming weeks. However, most eyes will be on the Federal Reserve and lawmakers as they scramble to contain the recent mayhem seen through markets. The expectations component of the index, which judges future economic conditions, dropped sharply from 92.1 to 85.3.

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