The US dollar remains strong this morning as the University of Michigan/Reuters consumer confidence survey reflected improvement for the second consecutive month in August. Indeed, the index rose to a 4-month high of 61.7 from 61.2, though it just missed expectations of 62.0.

Looking at a breakdown of the report, the pull-back in oil prices since mid-July appears to have had a huge impact, as the most noticeable change in the index was the drop in 1-year inflation expectations to 4.8 percent from 5.1 percent. Likewise, with inflation expectations easing, consumers are feeling a bit better about the economic outlook, as that index rose to a 5-month high of 56.8 from 53.5. Nevertheless, with job losses in the US mounting, credit conditions remaining tight, and food and energy prices still relatively high, the index gauging sentiment on current economic conditions slumped to 69.3 from 73.1.

The US dollar has gained in the minutes following the release as overnight index swaps continue to price in 75bps worth of hikes by the Federal Reserve within the next 12 months.

David Rodriguez is a Currency Analyst at FXCM.