US CB Consumer Confidence Index fell to 88.7 in November
US consumer sentiment lost momentum in November, as the Conference Board’s Consumer Confidence Index fell to 88.7 from a revised 95.5 (from 94.6), curtailing the previous recovery.
  • US CB Consumer Confidence Index recedes in November.
  • The US Dollar Index remains on the back foot below 100.00.

US consumer sentiment lost momentum in November, as the Conference Board’s Consumer Confidence Index fell to 88.7 from a revised 95.5 (from 94.6), curtailing the previous recovery.

From the data release: “The Present Situation Index—based on consumers’ assessment of current business and labor market conditions—fell by 4.3 points to 126.9. The Expectations Index—based on consumers’ short-term outlook for income, business, and labor market conditions—fell by 8.6 points to 63.2.”

According to Dana M Peterson, Chief Economist at The Conference Board, “Consumer confidence tumbled in November to its second lowest level since April after moving sideways for several months.” She added that “All five components of the overall index flagged or remained weak. The Present Situation Index dipped as consumers were less sanguine about current business and labor market conditions. The labor market differential—the share of consumers who say jobs are “plentiful” minus the share saying “hard to get”—dipped again in November after a brief respite in October from its year-to-date decline. All three components of the Expectations Index deteriorated in November. Consumers were notably more pessimistic about business conditions six months from now.”

Market reaction

The US Dollar (USD) extends its ongoing leg lower, motivating the US Dollar Index (DXY) to break below the 100.00 support and flirt once again with its key 200-day SMA in the 99.80 region.

Interest rates FAQs

Interest rates are charged by financial institutions on loans to borrowers and are paid as interest to savers and depositors. They are influenced by base lending rates, which are set by central banks in response to changes in the economy. Central banks normally have a mandate to ensure price stability, which in most cases means targeting a core inflation rate of around 2%. If inflation falls below target the central bank may cut base lending rates, with a view to stimulating lending and boosting the economy. If inflation rises substantially above 2% it normally results in the central bank raising base lending rates in an attempt to lower inflation.

Higher interest rates generally help strengthen a country’s currency as they make it a more attractive place for global investors to park their money.

Higher interest rates overall weigh on the price of Gold because they increase the opportunity cost of holding Gold instead of investing in an interest-bearing asset or placing cash in the bank. If interest rates are high that usually pushes up the price of the US Dollar (USD), and since Gold is priced in Dollars, this has the effect of lowering the price of Gold.

The Fed funds rate is the overnight rate at which US banks lend to each other. It is the oft-quoted headline rate set by the Federal Reserve at its FOMC meetings. It is set as a range, for example 4.75%-5.00%, though the upper limit (in that case 5.00%) is the quoted figure. Market expectations for future Fed funds rate are tracked by the CME FedWatch tool, which shapes how many financial markets behave in anticipation of future Federal Reserve monetary policy decisions.

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