US Manufacturing Strengthens, Markets Eye the Fed's Direction
US economic data again showed stronger-than-expected results. The Empire State Manufacturing Index rose to 19.6, well above the forecast of 7.3 and higher than the previous period's reading of 11.0. This figure indicates that manufacturing activity in the New York region is experiencing more solid expansion, while also signaling that the US industrial sector remains quite strong amidst the pressure of high interest rates.
Furthermore, the Capacity Utilization Rate rose to 76.1%, higher than the forecast of 75.8% and the previous reading of 75.7%. This increase indicates that production capacity in the US industrial sector is being utilized more optimally. This means that demand for production remains quite strong and companies are still actively operating.
Another data that strengthened sentiment was Industrial Production m/m, which grew 0.7%, well above the forecast of 0.3% and a sharp improvement from the previous -0.3%. This increase in industrial production signals that factory, mining, and utility activity in the US is beginning to recover more strongly than the previous month.
Consequently, this data has the potential to support the strengthening of the US dollar, as the market can assess that the US economy remains quite resilient. However, for gold, strong data like this could be a source of pressure, reinforcing expectations that the Fed doesn't need to rush to cut interest rates. If the US dollar and yields also rise following this data, gold prices risk further pressure.
Reasons for the Market Impact
Stronger manufacturing and industrial production data indicate that the US economy remains solid. This could lead the market to believe that the Fed has room to maintain high interest rates for longer. Therefore, the US dollar could receive a boost, while gold and non-yielding assets could potentially come under pressure. (CP)
Source: Newsmaker.id
