Ahead of today’s UoM Consumer Sentiment, the USD index is on bearish move.
At the end of November the UoM Consumer sentiment fell to 91.3 vs its mid-month flash announcement of 93.1. However, analysts expect to see the consumer sentiment to improve by 0.7 points to 92.0 for today’s flash UoM reading for December.
Considering that we are now moving towards the Christmas holiday spending season we could expect to see a little bit of a puzzling data from the Consumer Spending Sentiment point of view, while the 2016 sentiment is expected to stand at 86.5 for the fiscal year of 2016.
|UoM Consumer Sentiment: Announced on 11/12/2015 at 3:00 pm GMT for Dec 2015|
|Sentiment index level||91.3||92.0||86.5 – 94.0|
If you are wondering how to boost your trading with UoM Consumer Sentiment data or any other fundamental announcement, you need to understand the fundamentals of the Fundamental Announcements.
Fundamentals of Consumer Sentiment
Consumer sentiment or consumer spending is mostly affected by the state of the economy, mainly by inflation and most definitely by the employment conditions. However, the state of the consumer sentiment also depends on other factors, such as terror attack fears, financial crisis fear or political instability and much more.
The pattern of the consumer sentiment is directly correlated to the financial markets; hence you would expect the FED taking all the developments in consumer behavior in their fiscal decision-making.
In Forex Market in order to trade UoM Consumer Sentiment results major industry players' focus is based on whether the economic growth manages to go overboard and lead to inflation. Ideally, for the Fed’s point of view, the economy needs to go through that fine line between a strong growth and excessive (inflationary) growth.
Although Crude oil prices often has a direct impact on consumer spending, we already have seen in 2008 that the consumer sentiment was at its record low despite record low oil prices too, due to recession, however the sentiment started to rise by the time the FED applied their QE programs.
So, if you are telling yourself, wow, I want to take advantage of this market move, there is a key point.
The UoM Consumer Sentiment is released to private subscribers minutes before the public, which may lead to massive pre-public-announcement market move.
How to go around this?
Do you wonder how to trade UoM Consumer sentiment? If so, the following is a small technique I use myself.
Market is often predictable from price action point of view. If you see that there is a tendency in the market to make a higher high and higher low, while your 50 SMA on hourly TF is moving on upward slope, this is generally a signal that the next market move will be bullish.
For now, watch the market developments and look for the following to trade UoM Consumer Sentiment:
EURUSD: Below 1.0930 bearish, above 1.0980 bullish towards 1.1190
GBPUSD: Below 1.5120 bearish, above 1.5170 bullish towards 1.5250
USDCHF: Below 0.9850 bearish towards 0.9745, above 0.9890 bullish towards 0.9930
OIL: Below $36.30 bearish targets towards $35 and $33.33