Article by AlgosysFx Forex Trading Solutions
On positive indications that improved consumer confidence could provide a boost to the world’s largest economy, the US dollar is deemed to gain ground opposite the Swiss franc today. After the encouraging Non-Farm Payrolls report for September, another report today is seen to reveal that Americans are ready to spend. Meanwhile, market jitters are likely to hamper the Franc as German Chancellor Angela Merkel visits Greece today for the first time since the debt crisis began.
Last Friday, the US Labor Department reported that the Unemployment Rate fell from 8.1 percent to 7.8 percent last month, its lowest level since January 2009, even as more Americans looked for jobs. Although only 114,000 positions were added in September, a combined 86,000 more jobs were created in July and August than previously estimated, indicating a more robust picture of the jobs sector. Average hourly earnings also exceeded forecasts and inclined by 0.3 percent last month to register its largest increase since June. Taken together, economists deem that the report suggested a healthier labor market as the employment-to-population ratio increased to its highest level since May 2010.
Such advances in the jobs market is likely one reason American consumer confidence has been steadily improving. The IBD/TIPP Economic Confidence report is estimated to increase from 51.8 points to 52.3 points in October, potentially its highest reading since September 2009. Apart from brighter job prospects, the continuing housing recovery and rising stock prices likely shored up sentiment among consumers. Household purchases account for approximately 70 percent of economic activity, and improved sentiment likely suggests that the US economy could recover in the second half of the year after expanding by only 1.3 percent in the June quarter.
Meanwhile, all eyes will likely be on Greece today as German Chancellor Angela Merkel, seen as a hate figure to many Greeks amid the crisis, is set to visit the Mediterranean nation in what observers call a show of solidarity and recognition. Merkel is expected to experience hostile reception from a people worn down by years of recession and austerity. Although Greek police have banned protests in most of central Athens, some teachers, doctors and other public employees vowed to stop work today. Trade unions and opposition political parties also expressed that they would march in the streets, risking confrontation with the police.
Athens is currently in talks with its troika of lenders on yet more austerity needed to secure the next tranche of its loan package, much to the disgust of many Greeks. Without the 31.5 Billion-Euro tranche, Greece says it will go bankrupt by the end of November. Although the visit likely highlights Merkel’s resolve to keep Greece in the Euro Zone, the ensuing turmoil her visit would bring is seen to keep the Euro and consequently, the Swissie under pressure. Considering these, a long position favoring the US dollar is advised for the USD/CHF today.
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