Analysts cautioned that the index's downturn could be a harbinger of a possible deterioration in the manufacturing sector. "We have been expecting some cooling in the manufacturing sector following a solid start to the year, but if the Empire State survey's orders index proves to be a reliable forward-looking indicator, the slowdown could be more severe than we had been anticipating," J.P. Morgan economist Daniel Silver wrote in a research note. The euro rose to a one-week high of $1.0989 against the dollar after the data, while the dollar hit a one-week low against the Swiss franc of 0.9958 franc.
"The data was weaker than expected, and the consensus was for it to increase ... so that further contributed to today's dollar weakness," said Eric Viloria, senior currency strategist at Wells Fargo Securities. The Canadian dollar hit its highest level in over two weeks and the Australian dollar hit a 12-day high as crude oil futures jumped and metals got a boost, strengthening the currencies of countries with economies that are highly correlated to material exports.
Saudi Arabia and Russia agreed on Monday to extend oil output cuts until March 2018 to rein in a global crude glut, pushing up prices by as much as 2 percent and dominating trade on European currency markets. That gave the Canadian dollar a 0.7 percent lift, to its highest since April 27. With prices of iron ore also rising, Australia's dollar hit a 12-day high of $0.7444, while the New Zealand dollar rose by as much as 1 percent to $0.6915.
Copyright Reuters, 2017