Dollar Flat Despite Chicago MNI Falls in April
THE TAKEAWAY: [US Chicago Purchasing Managers fell in April unexpectedly] > [Business activity shrinks due to Federal budget cuts] > [USD/CAD Mixed]
Business conditions in service and manufacturing companies in the Chicago region unexpected weakened during the month of April, to the lowest level since September 2009, indicating some slowdown in the manufacturing sector due to budget cuts. A report released today said that Chicago business barometer dropped to 49.0 in April from 52.4 last month. The composite Barometer fell short of the consensus estimate of 52.5 according to a survey polled by Bloomberg News. A reading above 50 indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.
The underlying details reveal that much of the weakness was concentrated in order backlogs and inventories, both falling to three-year low. Prices Paid Index was the only index above 50 in April but still the lowest since October 2009. As the Federal budget cuts that began on March 1 has lagged effect on the real economy, we may see continue cooling in the manufacturing sector.
USDJPY 1-minute Chart: April 30, 2013
Chart created using Marketscope 2.0– Prepared by Renee Mu
The U.S. dollar showed a fairly muted reaction to the release, with USDCAD little changed. At the time of this report was written, the USDCAD was trading at $1.0092.
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--- Written by Renee Mu DailyFX Research
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