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The Philadelphia Manufacturing Index for August 2013 dropped all the way to 9.3 points. It was expected to slide from the high level of 19.8 to 15.6 points this time. The NAHB Housing Market Index advanced to 59 points. It was expected to remain unchanged. The score of 59 is the highest since November 2005.  

The dollar was on a roll prior to this release thanks to the excellent drop in jobless claims. EUR/USD was trading around 1.3220 and it is now above 1.3230. USD/JPY was at 98.40 and it is sliding down to 98.10. A weaker dollar, but will it last?

Update: EUR/USD resumes its falls and hits a new low of 1.3210. However, USD/JPY remains above the pre-release levels and stands at 98.15 at the time of writing.

All the sub-components are falling: new orders are at 5.3, around half the previous number and employment is down from 7.7 to 3.5 points. It’s important to note that the numbers remain positive, despite the retreat.

Unemployment claims fell to a new 5.5 year low of 320K, better than expected. The 4 week moving average is also at the lowest since 2007 and continuing claims are back under 3 million. This publication had the strongest impact. In addition, inflation came out as expected and “didn’t get in the way”.

The markets ignored other indicators released later and all disappointed: TIC Long Term Purchases, Capacity Utilization Rate and industrial output all fell short, but they only temporarily slowed the dollar.

Further reading:  Septaper is a close call both for markets and the Fed