US Leading Indicators bump up in September. Bernanke backs 2nd stimulus. Dollar gains in currency trading. | CountingPips Forex Blog

October 20, 2008 - Forex Economic News

US Leading Indicators bump up in September. Bernanke backs 2nd stimulus. Dollar gains in currency trading.

The U.S. Leading Indicators Index published by the Conference Board today showed an increase in September for the first time in five months. The Leading Indicator Index, which measures future economic activity, registered a 0.3 percent increase in September following USD gains in currency trading a decrease of 0.9 percent in August. The 0.3 percent increase for the month surpassed market forecasts which were expecting a decrease of approximately 0.2 percent.

The Leading Indicator Index combines ten important economic indicators to produce one index reading. September's index showed six out of the ten indictors were positive while four were negative. The positive indicators for the month were index of consumer expectations, real money supply, index of supplier deliveries, interest rate spread, manufacturer's new orders for nondefense goods and manufacturing new orders for consumer goods and materials. The negative indicators for the month were building permits, stock prices, weekly jobless claims and average weekly manufacturing hours.

The coincident index, which is viewed as a measure of the current economic activity, fell by 0.5 percent in September while the lagging index, which follows economic changes, showed a decline of 0.2 percent for the month.

Fed Chairman Bernanke backs second stimulus package.

Also in economic news out of the U.S. today, Federal Reserve Chairman Ben Bernanke backed a second stimulus package in a speech before the Committee on the Budget, U.S. House of Representatives. Testifying on the economic Outlook and the financial markets, Bernanke stated that "with the economy likely to be weak for several quarters, and with some risk of a protracted slowdown, consideration of a fiscal package by the Congress at this juncture seems appropriate." The government previously provided a stimulus package earlier this year to spur the economy by giving tax rebates to Americans of up to $600. That stimulus package did boost consumer spending for May before declining in the following months amid renewed economic and market turmoil.

Bernanke warned that the "optimal timing, scale, and composition of any fiscal package are unclear" and that any new stimulus package "should be structured so that its peak effects on aggregate spending and economic activity are felt when they are most needed, namely, during the period in which economic activity would otherwise be expected to be weak." Read the full Bernanke speech here.

Dollar rises in currency trading today.

The U.S. dollar has been rising in currency trading today as it has gained against the euro, pound, yen, loonie and Swiss franc while declining verses the aussie and kiwi. The EUR/USD has tumbled today from its 1.3456 opening(00:00 GMT) to trading at 1.3339 near the end of the U.S. trading session before 5pm ET. The GBP/USD, meanwhile, has almost fallen today by 200 pips from its 1.7346 opening exchange rate to trading at 1.7163 later today. The dollar has advanced verses the Japanese yen and trading at 101.93 after opening at 101.74. The USD/CAD almost reached the 1.2000 threshold today before retreating and trading at the exchange rate of 1.1927. The USD/CAD has gained almost 100 pips from its 1.1831 opening. The dollar has gained against the Swiss franc as the USD/CHF trades at 1.1501 and reached its highest level since December 26th of 2007. Meanwhile, against the Australian dollar and New Zealand dollar, the American currency has lost ground as the AUD/USD has advanced to 0.7043 and the NZD/USD has advanced to 0.6239 in the currency trading markets.

USD/CHF Chart - The USD/CHF trades at its highest level since December 26th 2007(Daily Chart).

Today's Forex Chart

tags: leading indicators, fed chairman, bernanke, currency trading

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