Forex: USD/CHF eases from highs back towards 0.9500

TD Securities analysts observe that “the US manufacturing sector is continuing to enjoy a period of rebound as the bounce back in domestic economic growth momentum is pushing new orders and production activity close to their highest level in almost a year”. “This positive momentum should be sustained in April and we expect the headline ISM manufacturing index to remain essentially unchanged at 54.3, in line with consensus”, wrote Alvin Pontoh, adding that the pullback in Chicago PMI suggests that the risk to this forecast may lie to the downside. “This will mark the fourth consecutive month in expansionary territory for this indicator, as the sustained push higher has been reflected in the improving tone in the various regional manufacturing sector indicators, which are now all in expansionary territory”, he continued, pointing to the steady improvement in the new orders to inventory spread (a proxy for future production activity) which is now at its highest level since May, as key to upside potential for production activity. “New orders activity should advance during the month, with the employment sub-index also edging higher. Nevertheless, as the pace of growth slows in the coming months, we expect manufacturing sector activity to moderate”, Pontoh concluded.