According to our analysis EURUSD and USDJPY moved 33 pips on University Michigan Consumer Sentiment / Inflation Expectations data on 15 September 2023.

USDJPY (18 pips)

EURUSD (15 pips)

Charts are exported from JForex (Dukascopy).

Consumer Sentiment:

  • Consumer sentiment displayed a marginal decline of 1.8 index points during the current reporting period. Over the past two months, sentiment has exhibited relative stability, reflecting the cautious equilibrium in consumer outlook.

  • Presently positioned at 67.7 points, consumer sentiment stands approximately 35% above the nadir observed in June 2022, yet falls short of the historical mean of 86.

  • The sentiment trajectory revealed divergent movements across constituent index components and demographic segments. Nevertheless, the overall sentiment landscape remained largely unchanged from the preceding month.

  • Noteworthy is the mild enhancement in both short-term and long-term expectations for economic conditions in the current assessment. Despite this improvement, consumers retain an element of reservation regarding the future trajectory of the broader economic landscape.

  • While there has been limited mention of the potential federal government shutdown within the survey responses thus far, it is acknowledged that should such a scenario materialize, it could exert a detrimental influence on consumer sentiments. This resonance is reminiscent of earlier episodes involving the debt ceiling.

Inflation Outlook:

  • Observations pertaining to inflation remained salient within the consumer survey. Notably, consumers registered the deceleration in inflation but anticipate its resurgence.

  • Projections for year-ahead inflation exhibited moderation, declining from 3.5% in the previous month to 3.1% in the current month. This reading represents the lowest level recorded since March 2021.

  • Noteworthy also is the convergence of long-term inflation expectations, which settled at 2.7%, falling beneath the customary 2.9-3.1% range. This occurrence marks only the second deviation from this range in the past 26 months.

  • It is of relevance to highlight that the long-term inflation expectations currently observed were notably situated within the 2.2-2.6% range in the two years preceding the onset of the pandemic.

In summary, the consumer sentiment landscape reflects a nuanced trajectory characterized by marginal fluctuations. Within the broader context, consumers exhibit cautious optimism, manifesting in select enhancements in economic expectations. Meanwhile, inflation dynamics remain a focal point, with a moderation in short-term and long-term expectations noted, indicative of evolving perceptions amid ongoing economic developments.

Source: http://www.sca.isr.umich.edu

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