Consumer confidence recovered in the month of March, driving the U.S. dollar higher against all of the major currencies. The Conference Board index rose from 46.4 to 52.5, bucking the trend of the UMich and IBD reports. Thanks to improvement in the labor market and the rally in stocks, Americans have grown significantly more optimistic about present conditions and the outlook for the coming months. The labor index which measures the difference between people who thought jobs were plentiful versus hard to get rose to the least negative level since August. The improvement in confidence is in line with the improvement in the labor market expected this month and the prospect of stronger consumer spending. As mentioned on Monday, forex traders will continue err on the side optimism barring any significantly negative reports. Risk appetite should be sustained as the Dow continues to crawl towards 11,000. We are also nearing the month and quarter end which means there will be rebalancing flows. This month, given the rally in global equities and the strength of the dollar, any rebalancing flows by portfolio managers should be dollar negative. House Prices Rise in January Meanwhile according to S&P/Case-Shiller house prices rose 0.3 percent in the month of January. It is always interesting to receive new reports on the housing market but this report in particular tends to be more dated than the existing and new home sales reports which are released with a one and not two month delay. Nonetheless, it is important to mention that on an annualized basis, the decline was the smallest in 3 years which suggests that the housing market is bottoming - however with the recent decline in existing and new home sales, we question the timeliness of this report.

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