THE TAKEAWAY: [April Chicago Fed National Activity Index rises, reversing contraction in March] > [Near-trend growth and subdued inflationary pressures over the coming year] > [USD strengthens]
The Federal Reserve Bank of Chicago released a report today showing that the Chicago Fed National Activity Index (CFNAI), a weighted average of 85 economic indicators, rose to 0.11 in April from -0.44 the month prior (downwardly revised from an initial estimate of -0.29). A reading below zero signals below-trend growth in the U.S. economy and decreasing pressure on future inflation.
The rise in the CFNAI in April was led by improvements in production-related indicators. Of the four broad categories of indicators that make up the index, only the production and income category and the sales, orders and inventories categories improved in April. Meanwhile, the three-month average, which provides a broader perspective on recent growth trends, fell to -0.06 in April from 0.02 in March. April’s average suggests that while growth in national economic activity had contracted slightly, it was near its historical trend. Furthermore, it suggests subdued inflationary pressures from economic activity over the coming year.
AUDUSD 1-minute Chart: May 21, 2012

Chart created using Market Scope – Prepared by Tzu-Wen Chen
In the minutes following the data release, the greenback strengthened against the Australian dollar, rising as much as 15 pips in the first 15 minutes. At the time of this report, the greenback continued to trade higher, with the AUDUSD pair trading at around $0.9820.
--- Written by Tzu-Wen Chen, DailyFX Research