First look at August consumer confidence – ING

The US dollar (USD) received a boost yesterday from better-than-expected retail sales data, notes Chris Turner, FX strategist at ING.

DXY will drop to 102.15/25 next week

“The data led investors to price in a 25bp Federal Reserve rate cut on September 18. There will be a multitude of data inputs into the Fed equation and the calendar of events will begin next week. For today, however, the focus will be on August University of Michigan consumer confidence data. This survey will be conducted during the stock market crash in early August and could see consumer expectations fall further. This could be a little easy on the dollar.”

“Elsewhere, firmer US rates allowed USD/JPY to slip back towards 150 and encouraged backflows into high-yielders such as the Mexican peso and South African rand. We still have our peso concerns given potential constitutional reforms next month and doubt investors will chase USD/MXN much below 18.50.”

“DXY is consolidating, but we’re trending lower at 102.15/25 next week.”