Article by AlgosysFx Forex Trading Solutions
The US dollar is foreseen to halt its declines and begin the week bullishly alongside the Australian dollar today as a lone economic report from the US is deemed to disclose that factory conditions remain bleak. Likewise, demonstrations around the world linked to territorial and political issues around the globe have managed to dampen investor moods.
Today, the Federal Reserve Bank of New York is awaited to report that its Empire State Manufacturing Index remained in the negative this month. The September index gauging manufacturing conditions in the New York area is estimated to come in at -1.9 points from -5.9 points in August. Although this represents an improvement, a negative reading still suggests that factory activity failed to rebound as falling new orders, production levels and employment all take their toll on the sector. Weak consumer spending at home, steady declines in business orders for large machinery and softening demand abroad have all combined to slow factory output. Last month, the Institute for Supply Management reported that factory activity shrank for a third straight month, and today’s report suggests that September is likewise unlikely to provide a boost to economic growth. Amid another sign of the tepid US economic recovery, safe haven trades are deemed to boost the US dollar.
In political news, the Obama administration is believed to announce today that it will file trade complaints to the World Trade Organization over government subsidies for its automobile industry. One of the administration’s complaints accuses China of putting US manufacturers at a disadvantage by illegally subsidizing exports of autos and auto parts. Another complaint revolves around China supposedly imposing unfair duties on around $3 Billion in US auto exports. The complaints are seen to escalate an intensifying trade standoff between Beijing and Washington DC. Meanwhile, still in China, demonstrators protested in a dozen cities, calling for Chinese sovereignty over islands that are also being claimed by Japan. Tensions rose after Japan announced that it would purchase the islands, known as Senkaku in Japanese and Diaoyu in Chinese. This prompted the Chinese government to dispatch government vessels near the islands. With these tensions deemed to harm global trade and economy, risk-off moods are presumed to increase. Hence, a short position is advised for the AUD/USD today.
For more news, analysis, technical charts and candlestick analysis, visit AlgosysFx
