Dollar weakens against most currencies except the Japanese yen in European session today but much stronger than expected NY state manufacturing index is providing some support to the greenback in early US session. The NY Empire State general business conditions index rebounds strongly in Oct from 14.7 to 28.8, beating expectation of 14.7.This is the highest reading since Jun 06. Also, consider that the index stayed above 20 level since Jun with just one sub 20 reading in Sep right after the turmoil in financial markets. The rebound in Oct suggests that business conditions are now back to normal after Fed's 50bps rate cut in Sep.
Technically speaking both the dollar and Japanese yen remains weak. USD/CAD made another 31 year low of 0.9700 today while AUD/USD made another 23 year high of 0.9706. Further downside is still expected after finishing the current consolidation. On the other hand, the Japanese yen will continue to head lower on carry trades, considering the persistence strength in commodity currencies.
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