Like the name suggests, this one is a survey made by the University of Michigan and it consists of asking respondents to rate the level of current and future economic conditions. Based on their answers, the index is composed and released.
Higher values than the forecast should be positive for currency, while lower values should be negative for the currency.
It is important for traders as it brings into discussion financial confidence, which in turn is a leading indicator for consumer spending.
It is coming in two releases, 14 days apart, one being the preliminary sentiment, and the later one being the revised one. From the two, the most important one is the preliminary as basically it offers a glimpse into the final number so traders tend to react the most to this preliminary sentiment.
Lately the indicator has coming with higher values, especially last three months, from May till July, with values way above the 80 level, indicating strong consumer sentiment and confidence.
The most important things to take into consideration when looking at University of Michigan Consumer Sentiment are the following:
- Release date: monthly, around the middle of the current month;
- Release time: 13:55 GMT, during North American session;
- First tier data;
- High volatility.