U.S. Economy Off Track

Yesterday in the US, the Conference Board Consumer Confidence Index came out slightly lower than last month’s figure. The index is now at 94.2, reversing its trend from the March reading of 96.1. The present Situation Index followed the same patch, declining from March’s 116.4 to 114.9, while the Index of Expectations came back from 83.6 to post 79.3 in April. Overall, the set of reports left the impression that the US economy is off track for the moment.

The GBP/USD cross went up, reaching fresh two and a half months highs above the 1.4600 thresholds, being backed-up by the poor US data release regarding durable goods orders. The US durable goods orders went up with 0.8% in March compared to February but missed the expected 1.8% advance. February’s orders were revised down to a 3.1% drop from a 3.0% contraction initially estimated. Orders excluding transportation went down with 0.2% while analysts expected a 0.5% increase for last month. The pair’s trend line broke over the 1.4600 psychological thresholds, posting the highest mark since early February, 1.4616. At the moment of writing, the spot was trading at 1.4610, with a 0.42% gain for Tuesday.

In Europe, on Monday, the German Ifo (Institute for Economic Research) Index for Business Climate came out at 106.6 for the month of April, while the March figure posted 106.7 and the expectation was set at 107.1. The Current Assessment Index sub-survey from the same Ifo shows that the current conditions in the Eurozone’s most powerful economy headed backwards, coming in at 113.2 points versus an 113.8 estimate (also last month’s level). The Expectations Index – indicating companies’ outlook for coming 6 months – went up to 100.4 points, 0.4 points over March’s posting and 0.5 points under the estimated 100.9.

The EUR/USD major did not change much this week amid weaker data from the US and mixed reports from Europe. The rate rose by 100 pips (from 1.1230 to 1.1330 at the time of writing) from Monday till Wednesday, but this move seemed more like a technically based recovery for the Fiber (EUR/USD).

The black gold is consolidating its position on the narrow trading path set a few days ago, after misleading investors prior to the OPEC (Organization of Petroleum Exporting Countries) meeting in Doha the other week. The meeting's purpose was a "collapse" in oil prices which had to have come after an output freeze treaty that never materialized. In yesterday's early European session, crude prices fell to $42.48 per barrel. During the day, the WTI (West Texas Intermediate) barrel climbed back to $43.00 per barrel. The current level is testing the $42.50-40 resistance line, determined by the 200 daily SMA (Simple Moving Average) and March's highs.