By Trang Nguyen, THE TAKEAWAY: Chicago Fed National Activity Index Rebounded Less Than Estimates in September> Production Sector Improved and Housing Sector Remained Weak > U.S. Dollar Mixed The Chicago Fed National Activity Index, a weighted average of 85 economic indicators, improved to minus 0.22 in September from a minus 0.59 revise in August, according to Federal Reserve Bank of Chicago gauge today. The print missed consensus forecast of minus 0.10 from Bloomberg survey. A negative index reading pointed to a below-trend growth and lessening pressures on future inflation. The three-month average, which provides a more consistent picture of national economic growth, moved up to minus 0.21 from Augusts’ minus 0.28. Despite of remaining in negative territory for the sixth straight month in a row, three-month average figure has not signaled a possible recession in the near future. The August monthly index was revised downward to minus -0.59 from an initial estimate of minus 0.43. Chicago Fed National Activity Index: January 2010 to Present Prepared by Trang Nguyen Of 85 economic indicators that constructed the Chicago Fed national index, thirty-nine made positive contributions while forty-six made negative contributions. Fifty-six indicators picked up from August to September, while twenty-seven indicators worsened and two were unchanged. Production-related indicators made a positive contribution of 0.02 to September’s reading with 0.2 percent gain in industrial production and 0.4 percent advance in manufacturing production. Consumption and housing sector slightly improved to minus 0.3 from minus 0.38 in August, in which rise in housing starts offset decline in housing permits. Sales, orders and inventories category add 0.02 to the index after contracting 0.03 in August. USD/CAD 1-minute Chart: October 24, 2011 Charts created using Strategy Trader – Prepared by Trang Nguyen Foreign exchange trading crowd show mixed reactions in the greenback following the release. As can be seen from the one-minute USDCAD chart above, the currency pair increased about 15 pips from 1.0055 to 1.0070 after five minutes. Then, the currency fell back to 1.0050 after twenty five minutes. At the times this report was written, the greenback traded at C$1.00598. Obviously, the Chicago Fed national index reading today reinforces the concerns about the slow recovery as well as deteriorated employment and housing conditions in the United States. The figure also somewhat fuels the speculation on the third round of quantitative easing that helps boost economic growth and support a sagging mortgage market as well. --- Written by Trang Nguyen, DailyFX Research Team for DailyFX.com To contact Trang, email firstname.lastname@example.org
DailyFX is the forex news and research arm of FXCM, Inc (NYSE: FXCM), which provides currency trading and brokerage services and is an advertiser on TheStreet websites. Any opinions, news, research, analyses, prices, or other information is provided as general market commentary, and does not constitute investment advice. Dailyfx will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. Currency trading involves significant risk of loss. Individual authors may hold positions in the currencies discussed in the article.