The U.S. Dollar rose across the board yesterday as better than expected CB Consumer Confidence numbers boosted an already strong greenback. The dollar reached new two-week highs against almost every currency except the British Pound and the New Zealand Dollar, and was even more advanced against precious metals such as gold and silver.
The market’s mood had been fairly bullish on the U.S. Dollar since last Friday’s hawkish comments indicating an increased possibility of an interest rate hike occurring sooner rather than later by the Chair of the Federal Reserve, Janet Yellen.
CB Consumer Confidence Results
The Consumer Confidence numbers are a soft, “subjective” indicator as they are composed entirely of survey results. Every month the Conference Board Inc. surveys a sample of five thousand American households and asks them to rate relative levels of the overall economic situation and other more detailed factors. This month, the headline number came in at 101.1 compared to a consensus expectation of 97.2. It was also an improvement upon last month’s result which was 96.7. There is a stronger argument now for an interest rate hike, but a much bigger factor is going to be the Non-Farm Payrolls data which will be released later this week, on Friday.
Full Employment in the U.S.A.?
Earlier, the Federal Reserve’s Stanley Fischer raised eyebrows when he remarked that the U.S. economy is “very close to full employment”, citing a continuing unemployment rate very close to 5%. “Full employment” as defined by economists does not mean that everyone who wants a job has a job, but something fairly close to it. Critics however argue that the definition of unemployed has been defined down statistically so many times that the true figure is certainly much higher than 5%. Considering that the labour participation rate in the U.S. has fallen from 66% in 2008 to under 63% now, the official statistic that real unemployment has truly more or less halved over this same period is questionable.