US consumer sentiment rises to March highs
US consumer sentiment improved in October despite constant concerns over the coronavirus pandemic.
The University of Michigan's consumer sentiment survey improved to 81.2 this month, the highest since March, while analysts expected a dip to 80.2.
USD/JPY tilted lower in Asian trade off September 15 highs following earlier data from Japan and ahead of US data today. As of 07:03 GMT, USD/JPY fell 0.16% to 105.49, with an intraday low at 105.47. Earlier Japanese data showed retail sales rose 4.6% m/m, compared to a 3.4% drop in July, while falling 1.9% on a yearly basis, compared to a 2.9% drop in July. Japan's industrial production rose 1.7% m/m, slowing down from 8.7%, while falling 13.3% y/y. Japan's housing starts fell 9.1% in August, improving from a 20.4% tumble in July. From the US, private sector employment is expected to have increased by 650 thousand last month, up from 428 thousand in August. US GDP is expected to have shrunk 31.7% in the second quarte, same as the previous reading. US Chicago PMI is expected up to 52 from 51.2, while US pending home sales are expected up 3.1%. Federal Reserve Bank of Minneapolis President Neel Kashkari is due to speak about COVID-19 and the economy at a virtual forum hosted by Wisconsin Manufacturers and Commerce. Federal Reserve Governor Michelle Bowman will deliver a speech titled "Community Banks Rise to the Challenge" at the Community Banking in the 21st Century Research and Policy Conference, via satellite. At his Congressional testimony, Fed Chair Jerome Powell said over $195 billion of aid was given away to counter the Covid 19 impact. He called on Congress to issue further stimulus to help families and small and medium companies as recession continues to haunt the economy. US President Donald Trump has refused to commit to a peaceful transfer of power in case his opponent Joe Biden won the presidential elections in November.
At 12:30 GMT, the Canadian economy released its monthly reading of the consumer price index, which fell by 0.1% in September, on par with forecasts and August's reading. The CPI y/y reading rose 0.4% vs. 0.1% in the previous reading, beating forecasts of 0.3%.
The US dollar rose against a basket of currencies on Tuesday, to extend gains for the third straight day, and hit a 6-week high, attracting demand as the best alternative investment, amid renewed fears of a liquidity crunch due to the sharp sell-off in most global stock markets, and ahead of Fed Chair Jerome Powell's testimony before the US congress about the coronavirus economic impact. The dollar index rose by 0.4% to the highest since August 12 at 93.89 points, after it opened at 93.55, and hit an intraday low of 93.47. The US dollar gained more than 0.6% yesterday, and posted its second straight daily gain, and the largest gain since August 19, buoyed by increased demand. The greenback shined as the best alternative investment due to growing concerns over that the global economy, after a surge in coronavirus infections in Europe and the US, and some countries considering re-imposing another public lockdown. This led most of global stock markets to drop sharply, and renewed fears about a liquidity squeeze of the US dollar. At 14:30 GMT, Federal Reserve Chair Jerome Powell is due testify before the House Financial Services Committee about the expected economic effects of the coronavirus pandemic The testimony is expected to deliver insight about the US economic outlook, the future of US monetary policy, and the prospects for further monetary stimulus. Bearing in mind that Powell unveiled a historic shift in US monetary policy at the Jackson Hole Economic Symposium that is aimed at allowing inflation to run above the Fed’s previous target to support the economic recovery from the coronavirus impact.