Philly Fed Confirms Rebound in US Manufacturing

Last updated 4/16/2009 10:29 AM ET (GMT -5) 0 Comments - Add your comment

Boris Schlossberg

Director of Currency Research, GFT

Note: Forex Trading involves high risks, with the potential for substantial losses and is not suitable for all persons. Past performance is not necessarily indicative of futures results.

The Philly Fed factory index survey printed far better than expected in April, coming in at -24.4 versus -35 anticipated. Every major sub component showed improvement with future index rising to 36.2 vs. 14.5 new orders climbing to -24.3 from -40.7 and employment at -44.9 versus 52.0.

The Philly Fed results confirm the better than expected reading from yesterday's Empire manufacturing survey and suggest that the sector is in the process of bottoming out. The news taken together with today’s very low reading in weekly jobless claims should provide a positive fundamental backdrop for risk appetite for the rest of teh day.

Equities were a bit lower in the aftermath of the report on profit taking, but the latest string of micro economic news supports the bullish argument that US economic activity may be ready for a rebound and therefore the rally in equities which has been so beneficial to high beta currencies does not appear to be in trouble just yet.

As we speculated earlier, the high beta currencies recovered from their European session lows and if US equities turn positive, may make another run at the highs. In particular cable looks primed to retest the 1.5000 barrier after profit taking knocked the pair towards the 1.4800 in early London trade. On the other hand if equities cannot generate any momentum off the positive fundamental news, high beta currencies could run out of steam very quickly.

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About The Author

Boris Schlossberg began his Wall Street trading career more than 20 years ago at Drexel Burhnam Lambert. There, he traded nearly every type of financial product on the market in the U.S., from equities and options to stock index futures and foreign exchange. His innate ability to analyze market information and use it to trade has helped him become an industry-recognized, “go to” trading professional.

These days, whenever the markets move, many organizations turn to Schlossberg for his take on the situation. He is a weekly contributor to CNBC's Squawk Box and a regular commentator for Bloomberg radio and television. His daily currency research is widely quoted by Reuters, Dow Jones and Agence France Presse newswires and appears in numerous newspapers worldwide. Schlossberg has written for publications like SFO magazine, Active Trader and Technical Analysis of Stocks and Commodities. He is also the author of Technical Analysis of the Currency Market and the co-author of Millionaire Traders: How Everyday People Are Beating Wall Street at Its Own Game with Kathy Lien. He joined GFT in 2008.