Consumer Sentiment Reports released by major financial institutions that include: Goldman Sachs, Citigroup, JP Morgan Chase, Bank of America and Wells Fargo are not good news for investors. The reports show consumers expect the dollar to decline against a basket of major currencies over the next year. This will put more pressure on the dollar as the global economic recovery continues to falter.
The forex market is a game of perception and psychology that plays a big role in the global economy. A negative report on consumer confidence can lead to an investor’s decision to hold off on any speculative move. A news report or a policy announcement from a company such as AT&T can prompt the dollar to fall against foreign currencies.
Consumer Sentiment Reports are used by major corporations to determine if their current marketing plans will work in the current environment. The reports are also used to determine if their proposed marketing strategies will move the needle on the bottom line or the sales numbers. In addition, most of these reports contain predictions of how much foreign currency the dollar will be worth at any given time. This can affect both the buy and sell decisions for the corporate investors.
Consumer Reports are in place to act as a guide for the investor as well as give them a sense of direction and predict how the world’s major economies will play out. The consumer Sentiment Reports should come with a warning however, that they have little value in the way of predicting where the US dollar will move in the coming months.
The consumer reports generally take into account several factors. The inflation, interest rates, cost of living, unemployment and the housing market will all be taken into consideration. These factors will also be combined into one overall scorecard that compares both countries and helps the investor to decide whether or not it is a good idea to make a specific move. One of the main reasons why an investor would use a consumer sentiment report as a guide is because the consumer reports are based on real-time events. They are available 24 hours a day, seven days a week and an investor can view them right from their computer. Investors can also follow the reports at home and use them to formulate a strategy as well.
The Consumer Reports take into account many factors in addition to those mentioned above. Other elements that are included are the inflation rate, the income levels, the spending habits of the consumer, their expectations, the unemployment rate, the interest rates, home buying tendencies and many others.
When it comes to predicting what the economic conditions will be in the coming months it is important to note that economic activity is sensitive to many variables. Economic stimulus measures will not help the situation, unless a company or individual makes a decision to take advantage of the same. It will be up to the consumer to choose which of the many stimulus measures a company or individual decides to take.
The Consumer Reports are meant to help the investor to determine if the price of the dollar will drop or increase. If a company has purchased dollars in order to increase sales then they are likely to do so whether the Consumer Reports believe it will work or not.
The Consumer Reports are not used as a guide for deciding on speculation on where the future will go. They are used as a guide to help the investor make informed decisions. To conclude the Consumer Sentiment Report is still based on economic factors and statistics that are considered to be out of date.
With regards to predicting the future of the dollar, the Consumer Reports is not very good at forecasting the direction that the dollar will go in the future. The reason for this is because of the general sluggishness of the economic recovery and the global economy recovery in general.
Investors can use the Consumer Reports to guide them but the only way they can get a true idea of how the dollar will fare in the future is by buying currencies with intent. Forex trading software programs that can help you place buy and sell orders with confidence and know exactly what you are getting yourself into.