The US dollar advanced for a second straight session on Friday after preliminary data showed a bigger than expected rise in consumer confidence, signaling that household consumption would continue to fuel the domestic recovery leading into the holiday season.
US consumer confidence advanced sharply in October, a preliminary report from Thomson Reuters and the University of Michigan showed on Friday. The consumer confidence index climbed to 92.1, higher than the September reading of 87.2 and well above forecasts calling for 89.
A gauge of personal financial expectations rose to its highest level since 2007, as did consumers’ views on purchasing more expensive durable goods.
“The rebound in confidence signifies that consumers have concluded that the fears expressed on Wall Street did not extend to Main Street,” said Surveys of Consumers chief economist Richard Curtin in a statement. “Importantly, the renewed confidence did not simply represent a relief rally, but instead reflected renewed optimism.”
Consumer confidence is a key indicator of personal spending, which accounts for more than two-thirds of US economic activity.
A separate report on Friday showed US industrial production fell for a second straight month in September, potentially lowering an already negative outlook on third quarter growth.
Industrial production slipped 0.2% in September after a revised 0.1% drop the previous month, the Federal Reserve said. In annualized terms, industrial production rose 1.8% in the third quarter.
The US dollar index advanced 0.2% to 94.56, fully recouping Wednesday’s losses that came at the hands of disappointing retail sales and producer inflation figures.
Gold prices traded inversely with the dollar on Friday after surging to three-month highs the previous day. Gold for December delivery, the most actively traded contract, was down $8 on the Comex division of the New York Mercantile Exchange.
Despite Friday’s losses, December gold is up $65 since the beginning of October on safe-haven buying and renewed interest among speculators and hedge funds.
In energy commodities, oil prices traded lower as investors continued to respond to government data showing a large pickup in US commercial crude inventories. On Thursday the US Energy Information Administration (EIA) said crude inventories rose by 7.6 million barrels last week, nearly triple the consensus estimate.
US benchmark West Texas Intermediate for November delivery slipped 8 cents to $46.30 a barrel on Friday. Brent crude, the international benchmark, was down 30 cents at $49.43 a barrel.