University of Michigan Confidence (MAY F)
Consensus: 79.5
Previous: 79.0

Outlook: The final release of the University of Michiganââ,¬â"¢s consumer confidence indicator is expected to remain little changed at 79.5 from the preliminary report two weeks ago at 79.0.  Gasoline prices, a huge concern for the American consumer, remain at high levels with no sign of easing in sight.  Especially as the start of the summer driving season, a period of traditionally very high demand for gasoline, approaches, consumers are budgeting in expectation of further increases in fuel prices as was seen during the same time last year.  Nonetheless, the figure continues to be propped up by continues strength in economic figures and positive employment prospects as wage earnings continue to fuel the potential for higher spending per individual.  The report is likely to weigh little on the minds of central bankers as the economy continue to churn ahead at a 5.3 percent pace, the strongest in almost two and a half years.

Previous: As high gasoline prices continued to weigh on the worries and wallets of US consumers, the confidence index dropped by the most since the double hurricanes hit the Gulf Coast of the United States at the end of summer 2005.  The preliminary index fell to 79 in May from Aprilââ,¬â"¢s final reading of 87.4.  Expectations only put a drop to 86.  As gas prices are up a third this year, this drop put into question whether consumer spending would be able to continue driving economic growth.  Concerns over energy expenses seemed to be outweighing the fact that the jobless rate was nearing a five-year low and wages were rising, but these indicators could dictate that consumers will be able to continue to spend at a healthy, albeit lower, level.  Coincidentally, the dip remains similar to results to be reflected in the Conference Boardââ,¬â"¢s consumer report.

Richard Lee is a Currency Strategist at FXCM.