The US Dollar ended Friday in the negative after a sharp run on the greenback followed disappointing U.S. consumer sentiment data.
US Consumer Sentiment Declines
U.S. consumer sentiment posted a surprise decline in November due to an increase in Covid-19 infections and the controversial US election prompting Americans to reassess their economic and financial outlook.
The University of Michigan’s preliminary sentiment index for November dropped to a three-month low of 77. This was an unexpected decline from last month’s 81.8 reading. Analysts had forecast a reading of 82.
The measure of expectations declined by almost 8 points to 71.3, whilst a gauge of present conditions was almost changed at 85.8.
The surveys, conducted before, during and after the US elections showed that the measure of expectations among Republicans fell to 76.4 from 96.4. Amongst Democrats, the measure of expectations inched higher to 69.3 from 68.6.
Richard Curtin, a director of the University of Michigan survey, said:
“Republicans now voice the least favorable economic expectations since Trump took office, and Democrats have voiced more positive expectations,”
“In the months ahead, the partisan gap is likely to enlarge, although the gains will be limited until a potential vaccine is approved and widely distributed.”
US Dollar Declines
The US Dollar saw a heavy day of declines on Friday, following the weak consumer sentiment data. Consumer spending is a large and essential part of the US economy. Approximately 70% of the entire US economy, the world’s largest economy, is accounted for by consumer spending.
Meanwhile, consumer spending, also known as personal consumption expenditures (PCE), increased 40.7% in the third quarter (Q3) of 2020, highlighting its importance and even reliance within the US financial ecosystem.
The greenback ended Friday with heavy declines. The EUR/USD closed the day up 0.25%, the USD/JPY plunged 0.47% lower, whilst the troubled GBP closed 0.55% up against the USD, the same increase the Australian Dollar saw against its American counterpart.
The US Dollar Index closed Friday down 0.26%.
