Article by AlgosysFx Forex Trading Solutions
Positive economic reports from the US today are deemed to strengthen the US dollar opposite its Swiss counterpart on views that the world’s largest economy is on track for recovery. Gauges of housing, consumer confidence and manufacturing are believed to show modest improvements, enhancing optimism for the US economy. Meanwhile, the bleak developments out of its primary trading partners in the Euro Zone will likely dampen the appeal of the Swissie.
Long considered a drag to the US economy, the housing market is seemingly recovering and is even gaining momentum. House prices have seemingly stabilized considering the recent increase in housing activity across the country. The Standard & Poor’s/Case-Schiller Composite-20 House Price Index is estimated to have inclined by 1.3 percent in July, larger than the 0.5 percent rise in the previous month and is potentially the largest monthly increase since August 2010. Corroborating this report, the FHFA is awaited to disclose that its House Price Index report rose by 0.4 percent in July to follow up the 0.7 percent increase in the previous month. Such price rises are likely to benefit the broader economy. When home prices increase steadily, Americans typically feel wealthier and spend more, a point the Federal Reserve Chairman Ben Bernanke made last week after the Fed unveiled a third round of quantitative easing.
Recent strides in housing have likely helped sentiment among American consumers improve this month despite sluggish job growth. The Conference Board Consumer Confidence report is deemed to recover from 60.6 points to 63.1 points in September, suggesting that at the primary engine of the economy is set to boost growth in the coming months. Manufacturing is also showing encouraging signs of recovery. Following the heels of the Philly Fed survey, manufacturing conditions in the Richmond area are also contracting at a slower rate. The Richmond Manufacturing Index is projected to improve to -6 points this month from -9 points in August. Considering all these positive signals for the US economy, the Greenback is believed to rise alongside its fellow safe haven counterparts.
Meanwhile, the Swissie is believed to drop on signs that the lingering debt crisis is taking its toll on the Euro region’s largest economy. Yesterday, the Germany Ifo Business Climate dropped for a fifth consecutive month to 101.4 points in September from 102.3 points, the weakest reading since February 2010. Earlier today, the GfK German Consumer Climate disappointed as it held steady at 5.9 points this month, defying forecasts of a rise to 6.0 points. With the outlook for the Swiss economy also in peril, a long position is viable for the USD/CHF in favor of the US dollar.
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