Global macro overview for 31/07/2017

Global macro overview for 31/07/2017:

Slightly disappointing data from the US economy were released last Friday. The University of Michigan Consumer Confidence Index final reading for the month of July increased slightly to 93.4 from the preliminary reading of 93.1, although was still below the final 95.1 for June. The reading was slightly above market expectations of 93.1, but the lowest figure since October 2016. The Current Economic Conditions Index increased to 113.4 from 112.5 in June as the overall gain was 4.0% over the year (the highest reading for 12 years). In contrast, the index of Consumer Expectations fell significantly from 83.9 to 80.5 although there was still a 3.5% annual gain.

The US consumers confidence might soon take another dip as the lack of the tax and healthcare reforms promised by Trump is getting more annoying even among the Republican Party members and citizens ( obviously Democrats were against the Trump administration reforms since the beginning, so no wonder here). The UoM Consumer Expectation sub index clearly shows the diminishing expectations for a constructive and reasonable outcome surrounding the tax and healthcare reforms. This kind of slide in consumer expectations very often precedes economic downturns and it looks like the Trump administration inability to pass their own reforms might be the important clue of a further consumer sentiment. As in any developed economy, the consumer spending and sentiment is one of the most important pillars of the gross domestic product, so any significant deep in sentiment and spending might have dire consequences for the US Dollar.

Let's now take a look at the US Dollar technical picture at the H4 timeframe. So far the bulls were unable to break out above the nearest technical resistance at the level of 94.07 and now the market is sliding towards the technical support at the level of 93.02 again. Moreover, the momentum indicator is unable to move above the fifty level despite the oversold market conditions, which indicate further weakness.

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