Article by AlgosysFx Forex Trading Solutions
Increasing signs of a US economic comeback are foreseen to incite risk appetites today, weakening the US dollar in turn. Yesterday, the US Commerce Department reported that improved confidence has stimulated Americans to shop more last month. Today, reports are foreseen to reveal that consumer prices edged up in September, the housing market sustained its improvement and industrial output recovered modestly.
Retail Sales in the US increased at a faster rate than forecast last month in a healthy sign that consumer optimism is on a high heading into the year-end holiday shopping season. Purchases advanced by 1.1 percent in September, easily beating forecasts of a 0.7 percent rise. Meanwhile, sales in August were revised higher to show a 1.2 percent incline. Taken together, August and September marked the best back-to-back showing since October 2010. Sales in most major sectors rose, with electronic goods seeing a 4.5 percent rise amid Apple’s release of the iPhone 5. Car dealer sales were up 1.3 percent while petrol sales grew 2.5 percent. Higher stock prices, a budding housing recovery and ameliorating job prospects have likely helped shore up confidence, boosting prospects for the sector which accounts for about 70 percent of economic activity. As such, the figures have raised hopes that the economy roared back in the third quarter after expanding by a tepid 1.3 percent annualized pace in the June quarter.
Meanwhile, the Bureau of Labor Statistics is awaited to report that inflationary pressures increased in September, likely led by a rise in energy costs. The headline Consumer Price Index is estimated to have inclined by 0.4 percent last month, following up the 0.6 percent jump registered in August. Core inflation is also deemed to have augmented by 0.2 percent last month, doubling the 0.1 percent rise in August, suggesting that other goods and services also saw a modest rise in prices amid increased economic activity. After being a drag to the US economy, the housing market continues to show more signs of life. The National Association for Home Builders is believed to report that its Housing Market Index rose further in October, topping the six-year high it set last month. The index is estimated to have increased from 40 points to 41 points this month, suggesting improving builder confidence. Low interest rates and improved confidence has incited a rebound in demand for properties, which in turn feeds into homebuilder confidence.
Finally, despite views that the slowing global economy has taken its toll on the manufacturing sector, the Federal Reserve is believed to report that industrial output picked up modestly in September. After dropping 1.2 percent in August, Industrial Production is projected to have edged up by 0.2 percent last month, suggesting that manufacturing activity did not falter as much as previously thought. Considering these reports portending brighter prospects for the world’s largest economy, risk-on trades are presumed to debilitate the Greenback. As such, a long position is advised today.
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