Confidence among U.S. consumers jumped in May by the most in six years, fueling speculation the economy will recover later this year.

The U.S. Consumer Confidence Index (CCI) is an indicator designed to measure consumer confidence, which is defined as the degree of optimism on the state of the economy that consumers are expressing through their activities of savings and spending. Global consumer confidence is not measured. Country by country analysis indicates huge variance around the globe. In an interconnected global economy, tracking international consumer confidence is a lead indicator of economic trends.

The Conference Board Consumer Confidence Index™, which had improved considerably in April, posted another large gain in May. The Index now stands at 54.9 (1985=100), up from 40.8 in April. The Present Situation Index increased to 28.9 from 25.5 last month. The Expectations Index rose to 72.3 from 51.0

In the currency market, the dollar was sharply lower against the euro. Late Tuesday, the euro was trading at $1.2707 vs. $1.2452 on Monday. All eyes were turned toward the Federal Reserve, which began meeting yesterday and will issue its interest rate pronouncement around 2:15 this afternoon, but the preliminary action in equities yesterday (Dow up almost 900) clearly indicated an expectation for a major cut.

“Now more than ever, the Fed’s decision could turnaround the currency and equity markets,” wrote Kathy Lien, of GFT Forex. “The recent strength of the U.S. dollar will add pressure on the Federal Reserve to make a larger interest rate cut but everyone needs to realize that the rate cut by the Fed this week will not be their last.”

Perhaps not, but if the expected cut of half to three-quarters of a point materializes, there won’t be much further to go. Some are