By Trang Nguyen, THE TAKEAWAY: March Chicago Fed National Activity Index Fell Back to Negative Territory > Below-Trend Growth and Lessening Pressures on Inflation > USD Tumble vs. Most of its Major Peers The Chicago Fed National Activity Index, a weighted average of 85 economic indicators, deteriorated to minus 0.29 in March from a revised 0.07 in February , Federal Reserve Bank of Chicago reported today. A negative print indicated a below-trend growth and lessening pressures on future inflation last month . The February index was upwardly revised to 0.07 from an initial estimate of minus 0. 09 . The three-month average, which provides a more consistent picture of national economic growth, plunged to 0.05 from February’s 0.37 . Though disappointingly falling back a negative territory for the first time in four months , three-month average figure has not signaled a possible recession in the near future. 85 economic indicators that constructed the Chicago Fed national index were drawn from four broad categories of data: 1) production and income; 2) employment, unemployment and hours; 3) personal consumption and housing; and 4) sales, orders and inventories. March negative reading was a result of deterioration in all four broad categories of indicator. Production-related indicators made a negative contribution of 0.13 to March ’s reading with 0.2 percent loss in manufacturing production and no improvement in industrial production . Consumption and housing sector continued to slip to minus 0.28 from minus 0. 24 in the previous month , in which rise in housing permits partly offset decline in housing starts . Sales, orders a nd inventories category add 0.03 to the index last month after contributing 0.0 4 in February. In contrast, the unemployment rate declined from 8.3 percent in February to 8.2 percent in March and average weekly initial claims for unemployment insurance reached a four-year low. USDJPY 1-minute Chart: April 26 , 2012 Chart created using Strategy Trader – Prepared by Trang Nguyen The U.S. dollar loses ground versus most of its major trading partner except its Canadian counterpart for the second day due to lingering effect from FOMC meeting yesterday . In the minutes following the dismal Chicago Fed National Activity Index report, the greenback immediately extended declines against its major peers. As seen from the 1-minute USDJPY chart above, the reserve currency tumbles 25 pips against the Japanese yen from 80.9 to 80.65. Obviously, the Chicago Fed national index reading today reinforces the concerns about the slow recovery as well as deteriorated manufacturing production and housing conditions in the world’s largest economy . --- 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.