Summary:

• US Empire manufacturing index 18.0 vs 18.8 exp and 19.4 prior
• Industrial production M/M comes in at 0.2% vs 0.3% exp and 1.2% prior
• USD moving lower again with USDJPY failing to break resistance

This afternoon is relatively light on the data front compared to recent days, with two second tier pieces the only releases of note from the US. The first out was the Empire state manufacturing index for December which fell to 18.0 from 19.4 previously, missing the forecast of 18.8.

The Empire manufacturing data focuses solely on the state of New York and whilst this is a large economic area it is obviously only a snapshot of one part of the US. Having said that, historically it has enjoyed a fairly strong correlation with the more widely viewed ISM release. We’ve not yet had the ISM release for December but today’s number could be seen to suggest there’s a chance that there is some weakness in it.  

 The drop in the Empire state index could be seen as a warning sign for the next ISM release given their historical correlation. Source: XTB Macrobond

The second data point saw the industrial production  rise by less than expected in another mildly disappointing release from the US. The M/M figure showed +0.2% compared to 0.3% expected and whilst the prior reading was revised higher (for the 4th time) in a row it still represent a miss. 

 

 Industrial production in the US has continued to rise but it remains a laggard compared to the ISM equivalent. Source: XTB Macrobond

The US dollar was trading lower today before these releases and they have not helped its plight. Despite the Fed rate hike on Wednesday the USDJPY has dropped lower this week and the pair could be seen to be on course for posting a bearish engulfing candlestick on W1. The area around 114.20 remains potential resistance that needs to be broken before any sustained gains can occur. 

 The USDJPY has dropped lower this week and engulfed the previous W1 candle. Source: xStation