Release Explanation: The Empire State Manufacturing Index is a survey of Manufacturing activity in the Fifth Federal Reserve District (It covers New York State, the 12 northern counties of New Jersey and Fairfield County in Connecticut.). It attempts to index economic activity by polling participants in regards to shipments, new orders, capacity utilization, employment, inventory, and raw materials. The Economic impact of the data has declined over the last two decades as manufacturing activity in the region moves to less expensive areas. However, like the other regional indexes, it will feed into the GDP release.
GDP is directly affected by the manufacturing activity in the country, of which the New York region is a component off. Durable goods and other releases such as Industrial output can be affected by the Richmond Fed activity. The currency may experience a slight movement on the release, but the significance of the data will be filtered down to Durable Goods and GDP, where the impact may be more significant.
Trade Desk Thoughts: Manufacturing in the New York Region declined for a ninth straight month in January, the N.Y. Fed reported today. Significantly, the gauge of expectations for six months from now became negative for the first time in the history of the series. The report indicates that weakening demand is forcing manufacturers to cut back on new investment. A stronger dollar combined with slowing economies around the world will put further pressure on businesses to make further adjustments in output, which means jobs will remain threatened.
Forex Technical Reaction: The dollar has lately tuned lower against the higher-yielding currencies and higher against the yen.