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Weekly Forex Fundamentals | Written by BHF-BANK | Oct 19 09 09:59 GMT |

(Week of 19 to 25 October 2009) Housing starts (Sep): moderate upward trend continuing Leading indicators (Sep): sharply increasing for the sixth consecutive month Existing home sales (Sep): temporary uptick because of special tax credit The NAHB homebuilders' index has been creeping up since February, but the September level of 19 was still far below the level of 50, above which the positive answers prevail. We expect the NAHB index to have improved slightly to 20 in October. In line with the upward trend in the NAHB index, housing starts have improved somewhat since spring. We predict that housing starts will have gone up by 3.7% to 6.20m in September, and building permits could have risen by more than 5% mom to 6.10m. Leading indicators are likely to have gone up significantly for the sixth consecutive month in September, by 0.7% mom. Thus the year-on-year rate will rise to 2.4%, and the annualised 6-month rate could even reach a six-year high of 10.5%. Most components will have had a favourable impact, especially the positive slope of the yield curve, consumer expectations, stock prices and jobless claims. The development of leading indicators suggests that economic growth is picking up noticeably after the severe recession that began at the end of 2007. The Fed's Beige Book is likely to state that economic activity has continued to stabilise in September and early October. But consumer spending will have remained soft, and there will have been a noticeable setback in car sales and production after the end of the Car Allowance Rebate System. Further signs of improvement are visible in residential construction, whereas commercial construction is following a steady downward trend. Wage and price pressures will have remained low, as the labour market situation remained weak, although the pace of layoffs is declining somewhat. After having improved for four consecutive months, existing home sales declined from 5.24m to 5.10m in August. However, as the upward trend in pending home sales has continued, we forecast that existing home sales will have risen markedly to 5.3m in September, boosted by the tax credit rules for firsttime home buyers, which will expire at the end of November. BHF-BANK http://www.bhf-bank.com This report has been prepared by BHF-BANK Aktiengesellschaft on behalf of itself and its affiliated companies (together "BHFBANK Group") solely for the information of its clients. The information and opinions in this document are based on sources believed to be reliable and acting in good faith, but no representation or warranty, express or implied, is made by any member of the BHF-BANK Group as to their accuracy, completeness or correctness. Opinions and recommendations are given in good faith but without legal responsibility and are subject to change without notice. The information does not constitute advice or personal recommendation, for which the duty of suitability would be owed, but may facilitate your own investment decision. Moreover, you should seek your own advice as to the suitability of an investment matter mentioned herein. Investors are reminded that the price of securities and the income from them can go down as well as up and that the past performance of an investment or a market is not necessarily indicative for future results. This document is for information purposes only. Descriptions of any company or companies or their securities mentioned herein are not intended to be complete, and this document is not, and should not be construed as, an offer to sell or solicitation of any offer to buy the securities mentioned in it. BHF-BANK Group and its officers and employees may have a long or short position or engage in transactions in any of the securities mentioned in this document, or in any related securities. This publication must not be distributed in the United States.