The value of the US Dollar against its major trading partner currencies is always in the news. Hawks in the US claim that the Chinese Yuan is artificially low against it which gives Chinese imports an unfair advantage in the US market. The Yen is near an all-time high against the Greenback despite the fact that Japan is in recession; reeling from a major natural disaster; struggling with deflation and from an aging workforce. The high Yen makes Japanese exports into the US market more expensive, forcing producers to cut their margins or risk losing market share. Forex is serious business.
However, the largest market for US goods and services is not China, Japan or even the EU. The domestic market in the US accounts for about 70% of demand and so that is the market which is critical to US fortunes – not to say that her export markets are unimportant to America, of course.
Data just released in the Conference Board Report has revealed that US consumer confidence is at its lowest point since March 2009. The index declined from the September reading of 46.4 to this month’s figure of 39.8. The index sets out to measure US consumers’ attitudes to spending and employment prospects in the short term. In happier times, an index value of 90 or upwards would indicate that the economy is healthy. Obviously, if consumers are concerned about job security, they will be reluctant to spend money on big-ticket items and will rein-in non-essential spending causing demand to tend downwards.
In other news, the Standard and Poor’s Case-Shiller index showed just a 0.2% rally in the house price for August. Year-on-year data showed that the average house price had fallen by 3.8% in August.