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Empire State Manufacturing Index posts growth for the first time this year
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Daily Currency Update
Just two days before the Federal Reserve’s highly anticipated rate decision on this Wednesday, a key manufacturing index reached its highest reading since April 2022.The Empire State Manufacturing Index, which measures the business activity for manufacturers in the US, climbed to 11.5 in September. This is the highest reading since April 2022 and easily beat an expectation for -5.0. The data release could be influenced by the Fed’s upcoming rate announcement on Wednesday. The market has priced in a cut of half a point, or 50 bps.
This morning, demand for the US dollar was down. The US Dollar Index hovered around 100.58, nearly a 13-month low, as investors left the US dollar for other assets.
Key Movers
On Thursday, the Bank of England is expected to keep rates on hold at 5%, as inflation, particularly in the service sector, remains sticky. With the prospect of a Fed cut looming, the US dollar has started the week on the back foot, with EUR/USD pushing back through 1.11 this morning and GBP/USD rising to around 1.3160.As of this morning USDCAD sits just below 1.36. the pair has recovered from the sharp drop in the 1.34 area earlier in the month. Canada reported July manufacturing sales up 1.4% vs 1.1% expectation. Compared to the previous month drop of -2.1%, this is a great indication of growth in manufacturing for Canada. The Bank of Canada will report CPI data tomorrow which will help provide clarity on the central bank’s policy decision next month. Many are expecting a 50-bps cut.
Expected Ranges
- EUR/USD: 1.1072 – 1.1138 ▲
- GBP/USD: 1.3121 – 1.3214 ▲
- AUD/USD: 0.67007 – 0.67488 ▲
- USD/CAD: 1.3567 – 1.3601 ▲
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