CB Consumer Confidence Declines; Rising Interest Rates Diminish Prospects for Short-Term Growth The Conference Board Consumer Confidence Index dropped from a value of 108.3 in December to 107.1 in January. The CB Confidence Report is made public every month on the final Tuesday.  for the month of

CB The report’s findings

• Based on consumers’ assessments of the current condition of the economy and job markets, the Present Situation Index rose from 147.4 previous month to 150.9 this month.
• The Predictions Index, which measures consumers’ near-term prospects for business, employment, and income circumstances, dropped from 83.4 in December to 77.8 this month.
• Low pay growth and higher borrowing costs following a series of abrupt rate increases have lowered near-term business operations and the employment prospects.
• Market attention is on monetary policy and the approaching Fed decision as a result of the mixed response to the lowering six-month expected growth for the economy.

Source: Conference Board

Traders remain on the lookout for indications of a Fed pivot as the Federal Reserve works to reconcile the goals of has a dual purpose (to promote “high employment” and stable prices).

Market investors are presently pricing a 25-basis point rate increase at Upcoming FOMC rate decision with a 99% chance. The Fed has maintained its hardline narrative, which could result in rates staying high for a prolonged length of time even though. The anticipated slowing in the velocity of tightening has already been factored into the market.

Source: CME fedwatch tool

CB and Restrictive monetary policy

Higher rates of interest and increased pricing pressures remain a major issue for economic prospects, despite the IMF recently updating its interim US GDP growth predictions by 0.4% for 2023 (raised to 1.4% from the October estimate of 1.00%).

Whereas the scenario risk for tomorrow might increase volatility, Friday’s NFP release might act as another trigger of market movement for both the US Dollar as well as risk assets.

US Fed Probable to stress that it remains adamant about achieving the peak rate

Markets already have factored in a rate increase of 25 bps, but pricing for the subsequent months and the terminal rate are less definite. Market action may result from the Fed’s stance on growth, inflation, and future rate increases.

A higher for extended posture might not have as much impact because the USD is less vulnerable to STIR (Near-Term Interest Rate) pricing. Although the Fed’s role as a driver for a recovery appears to be significant, the USD is inflated. Still, there are other areas of forex that shows evidence of rally exhaustion.