MEXICO: IMEF Manufacturing Index Rises to 46.2 in December

Industrial production was broadly as expected in the shutdown-delayed September report, continuing to hold at three-year highs for the Y/Y even if that’s only 1.6%. Core durable goods orders data have recently been more upbeat but ISM Manufacturing Chair Spence offers a more pessimistic take. 

• Industrial production was as expected in September as it increased 0.10% M/M after a weaker than first thought -0.26% M/M in August but equally a stronger than previously thought 0.16% in July.
• Utilities production adds volatility here, as is quite typical, rising 1.1% M/M after -3.0% M/M.
• Instead, manufacturing production continued a recent moderation trend, now registering -0.04% M/M in September after three steadily slower increases through Jun-Aug including 0.08% in Aug.
• In trend terms, overall industrial production firmed to 1.6% Y/Y for a joint high since Sep 2022 (looking at the seasonally adjusted data), whilst recent momentum is softer at 1.1% annualized on a 3m/3m basis.
• Manufacturing production paints a similar picture, at 1.5% Y/Y (highest since Apr 2022) and 1.3% annualized.
• Last week’s delayed September for durable goods orders offered a more upbeat tone (7.6% 3m/3m annualized, 4.0% Y/Y in nominal terms) but ISM manufacturing chair Susan Spence offered a more cautious take in Monday’s exclusive with MNI: "There's nothing that we're reading or seeing in the news and what's going on with tariffs that give me any confidence that all of a sudden the customers are going to come start ordering from us”.
• Capacity utilization meanwhile held steady at 75.9% with the Bloomberg calendar not capturing previously large downward revisions from 77.4% in annual revisions. Whilst off lows of 75.2% in late 2024, it still holds a sizeable trend easing in recent years and has stabilized before pre-pandemic rates. 

• RES 4: 1.1779 High Oct 1   
• RES 3: 1.1747 50.0% retracement of the Sep 17 - Nov 5 bear leg
• RES 2: 1.1728 High Oct 17
• RES 1: 1.1694 50.0% retracement of the Sep 17 - Nov 5 bear leg 
• PRICE: 1.1663 @ 16:33 GMT Dec 3
• SUP 1: 1.1584 20-day EMA 
• SUP 2: 1.1547 Low Nov 26
• SUP 3: 1.1491/1469 Low Nov 21
• SUP 4: 1.1469 Low Nov 5 and the bear trigger  

EURUSD is trading higher and this has resulted in a breach of key short-term resistance at 1.1656, the Nov 13 high and a bull trigger. Clearance of this level highlights a potential reversal and opens 1.1694 next, a Fibonacci retracement. Clearance of this retracement point would strengthen the developing bull theme. Initial support to watch is 1.1584, the 20-day EMA. A break would be bearish.

• US Data/Speaker Calendar (prior, estimate). All times ET
• 12/04 0730 Challenger Job Cuts YoY (175.3%, --)
• 12/04 0830 Initial Jobless Claims (216k, 220k); Continuing Claims (1.960M, 1.963M)
• 12/04 0830 Revelio Labor Statistics
• 12/04 0830 Chicago Fed Labor indicators
• 12/04 1130 Dallas Fed Weekly Economic Index
• 12/04 1130 US Tsy $90B 4W, $80B 8W bill auctions
• 12/04 1230 Fed VC Bowman on bank supervision (text, moderated Q&A)
• Source: Bloomberg Finance L.P. / MNI