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USD Remains Strong despite March Business Inventories Grew Less than Expected

By Trang Nguyen
15 May 2012 14:45 GMT

THE TAKEAWAY:U.S Business Inventories Grew 0.3% in March> Wholesale and Retail Stockpiles was Built at Slower Pace> USD Remains Strong vs. Major Currencies

The U.S. companies continued to restock for the fifth consecutive months in March, though the pace of inventory rebuilding slowed from previous months on strong sales increase.

According to a report issued by the Commerce Department today, manufacturers’ and trade inventories, adjusted for seasonal variations but not for price changes, rose 0.3 percent to $1,580.2 billion in March, following a 0.6 percent gain in February and 0.8 percent increase in January. The print missed consensus forecast of 0.4 percent increase from the Bloomberg News survey. From twelve months earlier, unsold goods held by business surged 6.6 percent.

Business inventories are the dollar amount of inventories held by manufacturers, wholesalers and retailers. The pace of restocking has diminished in March as merchant wholesalers reported a moderate gain of 0.3 percent in stocks compared to 0.9 percent rise in February. Similarly, retail stockpiles increased merely 0.4 percent after advancing 0.5 percent in February and soaring 1.1 percent in January. Meanwhile, manufacturing stockpiles grew at the same pace of 0.3 percent with the previous month. Since consumer spending was threatened to decline further on slower job growth in recent months that would drag on demand, businesses might struggle to maintain restocking at healthy pace in the near term.

The combined value of distributive trade sales and manufacturers’ shipment for March advanced 0.6 percent to $1,241.0 billion from February and rose 5.8 percent from a year prior. As sale moved up at faster pace than inventories in the month, March inventories-to-sale ratio fell to 1.27 from 1.28 in the previous month.

EURUSD 1-minute Chart: April16, 2012

051512_US_Business_Inventories_March_body_Picture_2.png, USD Remains Strong despite March Business Inventories Grew Less than Expected

Chart created using Strategy Trader – Prepared by Trang Nguyen

The U.S. dollar advanced 0.3 percent versus the euro around 9:00 A.M. EST after Greek leaders announced that no coalition government was formed and new elections would be coming. The single currency still trades below $1.2800 level in the minutes following the inventories and sales report. At the time this report was written, a euro trades at $1.2789.

--- Written by Trang Nguyen, DailyFX Research Team for DailyFX.com

To contact Trang, email tnguyen@dailyfx.com

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.
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15 May 2012 14:45 GMT