US DATA: Dallas Mfg Rounds Out Regional Fed Surveys Eyeing Nudge Higher In ISM
- The Dallas Fed manufacturing index was stronger than expected in July as it increased to 0.9 (cons -9.5) from -12.7 in June.
- It’s a third consecutive increase from the -35.8 in April, at what had been its lowest since Jan’16 outside of Mar-May 2020, and leaves it at the first positive reading since January.
- Within the details, new orders improved but remained in contractionary territory at -3.6 after -7.3.
- Outlook measures broadly improved: “Expectations for manufacturing activity six months from now improved. The future production index rose eight points to 30.3, while the future general business activity index rose five points to 19.0. Most other indexes of future manufacturing activity also increased, though some remain below their average readings.”
- This report rounds out the six regional Fed manufacturing releases for July, with four of the six improving (Empire, Philly, Kansas and Dallas vs Richmond and Chicago softening).
- The average of the six increased to 0.2 from -4.1 in June as it continued a recovery from a recent low of -17.4 in April, for the highest since March.
- This is within the margin for error around consensus currently looking for ISM manufacturing to have ticked up from 49.0 to 49.5 in Friday’s July release. Before then, the MNI Chicago PMI for July will be released on Thursday.
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US FISCAL: Available "Extraordinary" Measures To Ward Off X-Date Pick Up
Treasury reported Friday that as of Jun 25 it had $130B in remaining "extraordinary" measures (of a total $378B available) to ward off an "x-date" of running out of resources before defaulting. That's the highest in 2 weeks.
- Combined with $334B cash as of Jun 25 (after a bit of a buildup after the mid-June tax deadline), that's a total of roughly $465B in total resources available.
- We noted earlier this week that Treasury told Congress that it was required to extend its debt issuance suspension period from Jun 27 to Jul 24, in effect prolonging the use of extraordinary measures while we await a resolution to the debt limit impasse, probably through the fiscal legislation currently going through Congress.
- Realistically, fiscal dynamics so far this year point to potential for Treasury to get into September without running out of cash + extraordinary measures. That seems to be the broad market expectation.
US DATA: Cleveland, Dallas Fed PCE Medians Show Progress But Still Above-Target
The Cleveland and Dallas Fed's median PCE metrics showed a notable drop in May. All indices suggest PCE inflation running above 2%, and higher than the actual core and headline PCE measures, but pressures appear to have cooled from a pickup in the early months of the year.
- The Cleveland Fed's median PCE measure came in at 0.22% M/M, a 10-month low after April's 15-month high 0.31%. This left median PCE at 3.01% on a Y/Y basis, down from 3.06% prior for a the joint-lowest (with Feb) since September 2021.
- The Dallas Fed's annualized median rate fell to 2.01%, from 2.65% prior for a 10-month low. The 6-month annualized rate edged lower to 2.74% (2.76% prior), a 4-month low, with the Y/Y rate ticking down to 2.55% from 2.56%, echoing the Cleveland Fed for the lowest reading since September 2021.
USDCAD TECHS: Pivot Resistance Remains Intact
- RES 4: 1.4111 High Apr 4
- RES 3: 1.4016 High May 12 and 13 and a key resistance
- RES 2: 1.3920 High May 21
- RES 1: 1.2710/3803 20- and 50-day EMA values
- PRICE: 1.3658 @ 16:23 BST Jun 27
- SUP 1: 1.3618 Low Jun 26
- SUP 2: 1.3540 Low Jun 16 and the bear trigger
- SUP 3: 1.3503 1.618 proj of the Feb 3 - 14 - Mar 4 price swing
- SUP 4: 1.3473 Low Oct 2 2024
USDCAD has pulled back from its recent highs. The primary downtrend remains intact and short-term gains appear to have been corrective. Key support and the bear trigger has been defined at 1.3540, the Jun 16 low. Clearance of this price point would resume the downtrend. Any reversal higher would instead signal scope for a stronger retracement. Pivot resistance to monitor is at the 50-day EMA, at 1.3803.
