Philadelphia Fed Index Hits 4-month High; U.S. Dollar Falls
THE TAKEAWAY: Philadelphia Index Climbed more than Expected in February> Regional Production Continued to Grow> U.S. Dollar Falls
Philadelphia Fed Index for February climbed to the highest level in four months, suggesting that the regional production continued to expand at a faster pace. The results from the Business Outlook Survey of Federal Reserve Bank of Philadelphia showed the index rose to 10.2 this month from 7.3 in January. The print beats consensus forecast of 9 from the Bloomberg News survey.
Philadelphia Fed Index: June 2010 to Present
Prepared by Trang Nguyen
Within the Philadelphia Fed survey, new orders index registered for the positive reading for the fifth consecutive month and advanced from 6.9 to 11.7, reflecting higher demand for manufacturing goods this month. In contrast, the employment index dramatically plunged to 1.1 t in February from 11.6 in the previous month, suggesting a modest improvement in the labor market. Additionally, price pressures were more widespread this month, all firms polled reported rising prices for inputs and price hike for manufactured goods on balance.
Manufacturing executives are less optimistic about the long-term business outlook. The future general index declined to 33.3 this month from a previous reading of 49.0 as firms’ responses suggest decline in new orders and shipment in coming months. Regardless, firms are expecting to hire more employees over next six months, with the future employment index edging three points higher.
GBP/USD 1-minute Chart: February 16, 2012
Charts created using Strategy Trader– Prepared by Trang Nguyen
Minutes following the Philadelphia Fed report, the U.S. dollar edged lower versus most of its major trading partners. As can be seen from the one-minute GBPUSD chart above, the currency pair immediately climbed about 60 pips from 1.5700 to 1.5760 within forty minute. The Relative Strength Indicatorcrossing above 70- an overbought territory- for the third time following the release signaled that the foreign exchange traders were massively purchasing the sterling while cutting their dollar holdings. At the time this report was written, the British pound traded at $1.5753.
--- Written by Trang Nguyen, DailyFX Research Team for DailyFX.com
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.