Confidence Returning to the U.S. Economy?

There are signs that consumer confidence is returning to the U.S. economy. Even though the U.S. dollar is down today on the news that Abu Dhabi will bail out Dubai (the risk trade is back in vogue), there is nevertheless whisperings that the dollar isn't down as much as it could be. This is because recent news is supporting the greenback in forex trading on a fundamental level.

Last week, the news that consumer confidence is on the rise and the jobs situation is improving provided some support in currency trading for the U.S. dollar. Kathy Lien reports in FX360  on the possible impact of the economic news:

The implications are obvious, with consumer spending accounting for about 70% of economic activity, the relative strength or weakness of the recovery firmly depends upon it. To some extent, these reports prove that last week’s report on payrolls was the first sign that the job markets have reached a turning point. As consumers become more at ease and convinced that their jobs are safe, their wallets are more likely to be open for business.

So, even though the U.S. dollar is down today, it isn't down by much, with the euro only rallying modestly in forex trading so far.