The Philly Fed Manufacturing Index for May dropped to -5.2. It was expected to rise from 1.3 to 2.5 points. This is a very early indicator of manufacturing, and therefore has a significant impact, even though manufacturing is definitely not the biggest sector in the US. The disappointing number joins a growing list of shortfalls in the last few days.
EUR/USD traded around 1.29 before the publication and it hit immediately afterwards. USD/JPY traded around 102.20 and is struggling to hold on to 102. GBP/USD is getting close to 1.53, and AUD/USD is making an attempt to recapture the 0.9850 line it lost earlier.
The forward looking new orders component plunged to -7.9 – the lowest since June 2012. The employment component fell to -8.7, which is the lowest since September 2009, and is quite worrying.
Expectations may have been a bit lower after the negative Empire State Manufacturing Index released yesterday.
Earlier, the US reported mostly disappointing figures: jobless claims leaped from the lows of 328K to 360K, within the previous range. This sent the dollar lower across the board. In addition, CPI showed no inflationary pressures whatsoever, and housing figures were mixed.
Further reading: Abenomics showing early success – Where next for USD/JPY?
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