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Michigan consumer sentiment seen rising in July but staying low

The University of Michigan expects July’s preliminary Consumer Sentiment Index to rise to 54.4 from 49.5, a level still far below pre-conflict readings.

Reported · Written up by our desk · Major Pairs

American consumer confidence regained momentum in early July, according to preliminary data from the University of Michigan, but it remains at historically low levels. The Consumer Sentiment Index is expected to improve for the second straight month.

Markets will focus on the upcoming release of the University of Michigan’s preliminary July estimate on Friday, with the index projected to rise to 54.4 from 49.5 in June. The report also looks for improvement in consumers’ views on personal finances, business conditions, and purchasing plans, though confidence is still expected to be well below levels seen before the US-Iran war period.

FXStreet notes that U.S. consumer spending is a key driver of economic growth, accounting for about 70% of GDP, and that the Michigan sentiment gauge is often treated as a forward-looking indicator of U.S. trends. It adds that any deviation from market consensus can sway U.S. dollar related currency moves.

The preview points to a backdrop where easing inflationary pressures and less expensive energy have supported sentiment. It cites that crude oil has retreated from wartime highs and that June consumer and producer inflation came in below expectations, while it remains uncertain whether the improvement has fully reached households.

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