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The highly regarded  Philly Fed Manufacturing Index rose from the abyss, but only to -7.1 points this time. Manufacturing remains the weak spot of the US economy.

This is short of expectations that stood on -5 points. The negative numbers reflect worsening economic conditions.

EUR/USD reacts with a drop, and so does USD/JPY – risk averse.

The reaction is the exact opposite of the “risk appetite” or “risk on” reaction seen earlier, when jobless claims remained low and building permits surprised with a leap to 812K.

Housing continues to recover, while manufacturing is probably contracting. The Philly Fed index is often seen as an early indicator to the ISM Manufacturing PMI, released after the month ends.

The employment component in this Philly report is the most worrying part: it fell to -8.6, the lowest since September 2009. New orders improved a bit an prices are rising.