On May 18, the Empire State Manufacturing Index for May reached 19.6, marking the highest level since April 2022 and surpassing the expected 7.5 and the previous reading of 11. According to analysis from investinglive, while the overall index showed an increase, concerns remain regarding price increases and a decline in employment. On a positive note, new orders and shipments did see growth. Richard Deitz, Economic Research Advisor at the New York Fed, noted, "Manufacturing activity in New York State grew in May at the fastest pace in over four years. New orders and shipments rose strongly, and employment continued to increase. However, price increases accelerated significantly, while delivery times lengthened and supply availability deteriorated."
Additionally, Jeffrey Gundlach, CEO of DoubleLine Capital, indicated that investors should not anticipate a rate cut at the upcoming Federal Reserve policy meeting. "Earlier expectations were for two rate cuts this year, but the inflation market simply does not align with that view. In my opinion, with the two-year Treasury yield nearly 50 basis points above the federal funds rate, a rate cut is highly unlikely." Gundlach also commented that Kevin Warsh, who was recently confirmed as Federal Reserve Chair, is taking office during a "challenging period." He added, "DoubleLine's models suggest the first digit of the next CPI reading will be a '4'."
Market attention today is limited, with only the NAHB Housing Market Index for May from the United States being a key data point to watch.
Dollar Index On Friday, the dollar index climbed steadily, reaching a five-week high, and is currently trading around 99.40. The continued support stems from the impact of recent strong U.S. economic data and renewed expectations of Federal Reserve rate hikes. Additionally, rising U.S. Treasury yields have provided further backing. Safe-haven demand in the market has also contributed to the index's strength. Today, resistance is anticipated near 100.00, with support around 99.00.
Euro/US Dollar The euro declined on Friday, hitting a five-week low, and is currently trading near 1.1610. The primary pressure on the euro comes from the sustained rise in the dollar index, driven by renewed Fed hike expectations and safe-haven demand. However, expectations for a European Central Bank rate hike in June have limited further downside. Resistance is expected around 1.1700 today, with support near 1.1500.
Pound/US Dollar The pound fell against the dollar on Friday, reaching a five-week low, and is currently trading around 1.3310. The main factor weighing on the pound is the ongoing strength of the dollar index, supported by robust economic data, renewed Fed rate hike expectations, and safe-haven demand. Additionally, persistent concerns over political uncertainty in the UK continue to pressure the currency. Resistance is seen near 1.3400 today, with support around 1.3200.
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