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Forex: US Business Inventories Rise; USD Modestly Higher

Forex: US Business Inventories Rise; USD Modestly Higher

Renee Mu, Currency Analyst

The TAKEAWAY: [U.S. business inventories advanced 0.7% in September; sales grew 1.4%] > [Companies likely to place more orders] > [USDJPY weakens]

U.S. business Inventories rose in September for the twelfth straight month, while sales strengthened much more, indicating companies were interrupted by superstorm Sandy with little oversupply. The Commerce Department reported today that business stockpiles increased by 0.7% in September, following a 0.6% gain in August and a 0.8% advance in July. The median forecast of 45 economists surveyed by Bloomberg News called for a 0.6% increase in September.

Meanwhile, September sales surged 1.4%, hitting its record high since March 2011, after advancing 0.6% in previous month. Business Inventories are the total amount of inventories held by manufacturers, wholesalers and retailers. The pace of restocking climbed more than expected as wholesales inventories reported a gain of 1.1% in stocks compared with a 0.8% rise in August. Besides, retailers inventories rose 0.3% from the preceding month, while manufacturer stockpiles stayed at 6%, the same growth rate with previous month.

Given U.S. job market picking up as well as preparations for holiday purchases, stronger inventories and sales growth is indicative of boosted demand of production in manufacture department.

USDJPY 1-minute Chart: November 14, 2012

Forex_US_Business_Inventories_Rise_USD_Modestly_Higher_body_Clipboard03.jpg, Forex: US Business Inventories Rise; USD Modestly Higher

In the minute after U.S. Business Inventories was released, the U.S. dollar erased gains against Japanese yen. As can be seen in the one-minute chart above, USDJPY fell to 80.279 from 80.283. At the minute this report was written, USD came back to initial level, trading at 80.284.

--- Written by Renee Mu DailyFX Research

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.