How the Empire State Manufacturing Index affects the USD

The Empire State Manufacturing Index is a measure of the performance of a variety of companies in New York which is provided by the Federal Reserve Bank of New York. It is gotten through the Empire State Manufacturing Survey. This survey is conducted by the Federal Reserve Bank of New York.

The Empire State Manufacturing Index is a high-priority news in Forex as it measures the performance of over 200 companies from various industries that partake in the survey. As such the release of this news is most likely to affect the USD.

Below we explain the meaning of the Empire State Manufacturing Index, How the ESMI affects the USD, and how to read the ESMI.

What is the Empire State Manufacturing Index?

The ESMI is a statistical measure that shows changes in various business conditions in New York. It is the result of the Empire State Manufacturing Survey carried out by the Federal Reserve Bank of New York.

The ESMI serves as a view or an indicator that compares the current performance of over 200 companies in New York to past performance and future predictions.

Empire State Manufacturing Index

How is the Empire State Manufacturing Survey carried out?

The index is obtained through a survey carried out by the Federal Reserve Bank of New York every month. The survey involves participants or companies from across the state. These participants are selected from various industries. This enables the survey to reflect the general state of businesses in New York. No single industry dominates the pool of companies that respond to the survey.

The Empire State Manufacturing Survey is sent at the beginning of every month to over 200 manufacturing executives which could be the CEO or the President. It is sent to the same pool of executives. From the respondents about 100 responses were received. The responses to the survey are accepted up until the fifteenth day of the month.

ALSO READ  Consumer Price Index (CPI): How It Affects the Forex Market

The survey considers seasonality. That is changes in certain metrics due to seasons or special periods. For example, during the holidays (Christmas, New Year, Easter), some sectors may notice an increase in sales of commodities.

Seasonality is accounted for using a Logistic Transformation equation which can be obtained from the Federal Reserve Bank of New York

How does the Empire State Manufacturing Index affect the USD?

Like most news released from the United States, the Empire State Manufacturing Index had its effects on the United States Dollar (USD). Traders must know how the ESMI affects the USD to make better trading decisions.

An increase in the value of the Empire State Manufacturing Index from the previous month signifies an increase in the general business conditions in the state of New York. Better business conditions in turn may signify a better economy and a stronger USD. The opposite also applies in the case of a reduction in the value of the index. In such a scenario, traders may expect a fall in the value of the USD.

While the ESMI may reduce in value, its value could still be much better than predictions or forecasts. In such a scenario, traders may expect a rise in the value of the USD as it is seen as a positive outcome.

It should be noted that the USD pairs may still move in any direction regardless of the news as many other factors could affect its value.

How does the Empire State Manufacturing Index affect the Forex market?

The Empire State Manufacturing Index like every other forex news has its effects on the market. After subjecting the ESMI to years of backtesting, we have the effects of the ESMI on the forex market.

The ESMI is a USD news and therefore it affects the USD which is a key currency in all major currency pairs. It is expected that positive ESMI news should signal a strong USD and vice versa.

Firstly, over the past year, the ESMI candles at the instance of the news release are mostly small in size with low momentum. The highest candle was about 52.6 pips and the lowest was 9.2 pips. We can say traders don’t actively watch out for the ESMI. However, the candles had high momentum when compared to surrounding candles 42% of the time. 

When comparing the meaning of the Index to the result on the forex market, we noticed that though the ESMI candle often has a low momentum, the ESMI candles moved the direction of the news release 50% of the time. That is when it was positive, we saw a bullish candle on USDXXX pairs.

ALSO READ  Non-Farm Payroll In Forex Trading [2024]

We will now explain how to read the Empire State Manufacturing Index.

How to read the New York State Manufacturing Index

Time Needed : 00 days 00 hours 05 minutes

The Empire State Manufacturing Index consists of about 12 different indicators with the “general business conditions” serving as the major ESMI headline.<br>The general business conditions indicator is not a weighted average of all indicators as the name might imply. It is a different question asked in the survey. It is the main index on the headline of the ESMI.<br>To read the Empire State Manufacturing Index, the following steps should be followed

  1. Get the current month's NY State Manufacturing Data

    Check the current month’s ESMI data released by the Federal Reserve Bank of New York. This data can be found on trusted Forex news outlets such as Forex Factory or the website of the Federal Reserve Bank of New York.

  2. Compare the Actual value to the Previous value

    Inspect the previous index value and compare it to the current value. A drop in the current value of the general business conditions index from the previous one shows a decline in business activities in the state. For example, for October, the general business conditions index (the headline) had a value of -4.6. The previous month had a value of 1.9. This shows that the index fell by approximately 7 points indicating a decline in business activities between September and October.

  3. Compare Current value with Forecasts

    Empire State Manufacturing index ForecastWhen using Forex news outlets, you may be presented with their forecasts. When the actual value of the index performs better than their forecast. Then the news is read as positive news. This is because it has surpassed expectations. Therefore, traders should know the difference between the performance of the index against previous months and the performance of the index against general forecasts.

  4. Visit the Federal Reserve Bank of New York website.

    federal bank of new yorkFor more information on the Empire State Manufacturing Survey such as details on other indicators, visit the Federal Reserve Bank of New York website.

What is the effect of the Empire State Manufacturing Index on Gold?

The Empire State Manufacturing index did not cause high-momentum candles on Gold. Instead, most ESMI candles had little momentum. Further proving the point that traders do not actively watch out for the Empire State Manufacturing Index.

However, the ESMI still displayed economic significance on gold as the overall market trend moved in favor of the news 77.7% of the period of backtesting. This shows that the Empire State Manufacturing Index is an important news that traders can use to predict the future trend of the market. It is a good choice for swing traders.

ALSO READ  The Bank of England’s Monetary Policy and Its Impact on Forex

How to get the New York State Manufacturing Survey news very fast

The ESMI is released at various forex news outlets such as Forex Factory and Investing.com. It can also be gotten fast from the Federal Reserve Bank of New York released at 8:30 a.m. It is released at the middle of the month so traders should watch out for the 15th and 16th day of every month.

The Forex news outlets should be used because the majority of forex traders check these news outlets daily. Therefore, spikes or reactions to news releases will occur at the time the news is released by these websites.

Empire State Manufacturing Index 2024 Data

DateTime(GMT)ActualForecastPrevious
Mar 15, 202413:30-20.9-7.0-2.4
Feb 15, 202413:30-2.4-13.7-43.7
Jan 16, 202413:30-43.7-4.9-14.5
Dec 15, 202313:30-14.52.09.1
Nov 15, 202313:309.1-3.3-4.60
Oct 16, 202312:30-4.60-6.4/-7.001.90
Sep 15, 202312:301.90-9.9/-10.00-19.00
Aug 15, 202312:30-19.00-0.9/-1.001.10
July 17, 202312:301.10-3.5/-4.306.60
Jun 15, 202312:306.60-15.0/-16.0-31.80
May 15, 202312:30-31.80-3.7/-3.7010.80
Apr 17, 202312:3010.80-17.7/-18.00-24.60
Mar 15, 202312:30-24.60-7.9/-8.00-5.80
Feb 15, 202313:30-5.80-18.2/-18.00-32.90

Frequently asked questions about the New York State Manufacturing Index

What is the New York Manufacturing Index?

The New York Manufacturing Index is synonymous with the Empire State Manufacturing Index. It is the index obtained from the New York Manufacturing Survey which shows the general business conditions of businesses in New York.

What is the Empire Manufacturing Survey?

The Empire State Manufacturing Survey is a survey carried out by the Federal Reserve Bank of New York. It is done by issuing questionnaires to various participants in the state. From the questionnaire, participants report the difference and change in current values of indicators from the previous values.

What is the Empire State Manufacturing Index in Forex?

The Empire State Manufacturing Index is a high-impact news in Forex. It is an index that shows the general business conditions in New York. It can also serve as a proxy to measure the business conditions of the USA.

Is the Empire State Manufacturing Index a High-Impact Forex News

Yes, the Empire State Manufacturing Index is a high-impact forex news because it shows the economic state of businesses in New York in the USA.

Can the ESMI cause spikes in the market?

The ESMI sometimes caused large wicks or relatively larger candles. However, the average size of the candles was about 26.63 pips.

Which currency pairs are affected by the Empire State Manufacturing Index?

The Empire State Manufacturing Index is a USA forex news therefore it affects USD pairs. Traders should watch out for USD pairs such as USDCAD, EURUSD, AUDUSD, USDCHF, and other exotic forex currency pairs.

Conclusion

In conclusion, the Empire State Manufacturing Index serves as an indicator of the strength of the US economy. It can be used to determine future trends in the forex market. It is not actively watched by traders therefore it is mostly a small momentum candle in the hourly timeframe.