Euro Falls as EU Business and Consumer Confidence Disappoints

Source: Forex News

This week, the Conference Board released data on consumer confidence in the United States. The data showed that the consumer confidence was at the highest level in 18 years. This was good news to the Trump administration and Americans in general. However, the data was in contrast to the one released by the University of Michigan. Early this month, its data showed that the consumer sentiment fell to the lowest level since September last year. This shows the divergence of these surveys. The figure below shows the consumer confidence trends using the surveys from the University of Michigan and New York-based conference board.

The consumer confidence is a very closely number by investors and traders. They follow it because of the significant roles that consumers have in the economy. In all countries, consumers are the biggest purchasers. In addition, increased confidence is an indication that consumers are hopeful about their employment prospects, their financial well-being, and the direction the country is taking.

This data came as the country reported the fastest growth in the economy since 2014. The unemployment rate is 3.9%, which is the lowest level in decades. Inflation has been contained, manufacturing is growing, and the jobless claims are at a 40 year low. In addition, there are now more job vacancies than there are people seeking for jobs and the participation rate and wages are rising.

Today, we received the confidence numbers from the European Union. The data was not good. The business and consumer survey dropped to 111.6. This was worse than the expected 111.9. The confidence number has been declining for the past few months after topping a high of 115.3 in January this year. The business climate number of 1.22 was lower than the forecasted 1.28. This number provides an assessment of the cyclical situation in the EU and is closely followed by investors. The services sentiment for August fell to 14.7, which was lower than the expected 15.1 while the industrial sentiment of 5.5 was in line with expectations.

The numbers came shortly after Germany released the employment numbers for the month of August. The numbers showed that the unemployment rate remained unchanged at 5.2%. The rate has remained like that for the past three months. Before that, it had fallen from a high of 6.9% in October 2013. In general, the number of the unemployed in Germany rose to 2.335 million in August, which was worse than the expected 2.349 million. The unemployment change in the month was in line with the expectations. In total, the 8,000 people lost their jobs as expected.

Meanwhile, the UK released disappointing housing numbers. In July, the number of mortgage approvals fell to 64.77. This was lower than the expected 65K. It was likely a reflection of the fear of high interest rates after the BOE hiked for the second time in the year. This was true with the net lending to individuals which fell to 4 billion pounds from 5.4 billion pounds in June.

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