Investing.com – U.S. consumer sentiment unexpectedly fell in January amid speculation of the impact of recent tax legislation, dampening optimism over the American economy, according to a report published on Friday.
The preliminary publication of the data for January from the University of Michigan's Consumer Survey Center showed that consumer sentiment dropped to 94.4 from 95.9 in the previous month.
Analysts had forecast the reading to improve to 97.0.
The current conditions indicator also unexpectedly fell to 109.2 in January, from the previous 113.8. Economists were looking for an increase to 115.5
Consumer expectations increased to 84.8 in January, from the prior reading of 84.3. Consensus was looking for a larger increase to 90.6.
Chief economist Richard Curtin noted that tax reform was spontaneously mentioned by 34% of all respondents while 70% of those who mentioned tax reform thought the impact would be positive, and 18% said it would be negative.
“The disconnect between the future outlook assessment and the largely positive view of the tax reform is due to uncertainties about the delayed impact of the tax reforms on the consumers,” Curtin said.
“Some of the uncertainty is related to how much a cut or an increase people, especially high income households who live in high-tax states, face,” he explained.
After the report, EUR/USD was trading at 1.2242 from around 1.2245 ahead of the release of the data, GBP/USD was at 1.3857, compared to 1.3875 previously, while USD/JPY was at 110.59 from 110.65 earlier.
The US dollar index, which tracks the greenback against a basket of six major rivals, was at 90.30 compared to 90.28 before the report.
Meanwhile, U.S. stocks traded mixed after the open. The Dow Jones slipped 25 points, or 0.09%, the S&P 500 gained 4 points, or 0.13%, while the tech-heavy Nasdaq Composite advanced 10 points, or 0.14%.
Elsewhere, in the commodities market, gold futures traded at $1,334.60 a troy ounce, compared to $1,334.00 ahead of the data, while crude oil traded at $63.55, compared to $63.53 prior to the release.
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