So just recently the “Reuters/Michigan Consumer Sentiment Index” came out with a report involving the confidence in the USD.
The [U]consensus[/U] was 91.5, the [U]actual[/U] was 90.4 and the [U]previous[/U] was 90.0.
Since the consensus surpassed the actual it lead me to believe the market would not favor the USD. Then in about five minuets the GBP/USD went down 50 pips while most other USD base currencies surged about 20 pips.
Now that I look back, I must of just misread it. My guess is that the index technically showed more confidence in the U.S. economy but the consensus was just over valued.
Am I right or are there other outside events that I am not realizing?
The report was [B]slightly[/B] bearish (negative) for the USD. But, the Reuters/Michigan report (which was released at 10 am New York time) was [B]minor,[/B] compared to the other economic reports which jolted the USD-pairs earlier in the New York Morning Session (see below).
The GBP/USD did not move 50 pips in reaction to the Reuters/Michigan report. Check your chart again.
[B]All of the USD-pairs reacted in the same way (bearish USD)[/B] to the flurry of reports at 8:30 am (New York time), and to the Reuters/Michigan report at 10 am (again, see below).
No, you were right the first time. Your original assessment was correct. That is, the report was negative for the USD (albeit only slightly so).
The “other outside events” you were not factoring into your analysis were the 4 reports that came out at 8:30, all of them negative for the USD. They were:
Core Retail Sales month-over-month
Producer Price Index month-over-month
Retail Sales month-over-month
Core Producer Price Index month-over-month
The market reacted sharply to this flurry of negative news, sending the USD/XXX pairs down, and the XXX/USD pairs up.
Then, over the next 4 hours, or so, those spikes were partly (or largely) retraced. It was during those retracements that your Reuters/Michigan report came out, momentarily pushing the USD-pairs (slightly) back in the direction of the 8:30 am spikes. But, the effect of the Reuters/Michigan report was negligible and short-lived.
Here are two 5-minute charts, EUR/USD and GBP/USD, showing the New York Morning Session (8:00-12:00, New York time) on Friday, August 12.
On each chart, the letter [I][B]a[/B][/I] marks the 8 am candle, the letter [I][B]b[/B][/I] marks the end of the price spike, and the letter [I][B]c[/B][/I] marks the 12-noon candle. The asterisk ([B]*[/B]) marks the 10 am candle, when the Reuters/Michigan report was released.
As you can see, the Reuters/Michigan report was essentially a non-event.
Charts of the other XXX/USD pairs (AUD/USD and NZD/USD) show similar reactions to the 8:30 am reports, and the 10 am report.
Charts of the USD/XXX pairs (USD/JPY, USD/CAD, and USD/CHF) show [B]spikes to the downside[/B] (opposite of the XXX/USD pairs) at 8:30 am, and negligible reactions to the 10 am report.
