Consumer Sentiment

Definition

An experienced forex broker or trader will know that the feelings and spending habits of consumers are important to any economy. The Univeristy of Michigan’s Consumer Sentiment report, also know as the Index of Consumer Sentiment (ICS), is a monthly survey of 500 US households that measures such feelings and habits.

The ICS is nearly identical to the Conference Board’s Consumer Confidence Index (CCI). The ICS includes two monthly releases and both a preliminary and final reading. The report also includes two subindexes on current conditions and expectations for the future. Both are useful for FX trading.

FX Trading Importance

Exchange rates and forex trading are often influenced by the attitudes and spending of consumers. At nearly two-thirds of the economy, consumer spending is a major indicator of the health or weakness of the nationwide finances.

More confident consumers are more likely to shop and travel, and so the ICS is an important tool for gauging the direction of the market and speculating on pending changes.

However, changes in consumer confidence aren’t usually in tandem with retail sales on a monthly basis. Forex brokers and traders should keep this in mind and try to use the ICS in conjunction with other economic indicators.

Consumer Sentiment Source

The ICS is compiled by the University of Michigan’s Consumer Survey Center.

Consumer Sentiment Availability

The results can be found online at http://www.sca.isr.umich.edu/.

Consumer Sentiment Frequency

The University releases preliminary data at 10 AM EST on the second Friday of every month. Final data is released at 10 AM EST on the fourth Friday of the month.

Click back to the main resources page for more information on basic forex trading indicators. You’ll find general information on other closely-related forex trading economic indicators, such as the Core PCE Price Index and the Consumer Price Index.