Durable Goods Orders Beat With 4.9% – USD Rises

Durable goods orders rose 4.9% in January, nearly double the expectations. In addition, the previous number was upgraded to a drop of 4.6% against -5% originally reported. Core orders also beat with a rise of 1.8% against a modest advance of 0.2% expected, and also here, it came on top of an upwards revision from a drop of 1% to -0.7% this time. Jobless claims missed with a rise to 272K against 270K predicted.

The US dollar is moving higher across the board, with no differentiation between safe haven and risk currencies. Are we back to normal days?

Also other measures of orders that exclude or include various components all beat expectations. Excluding air and defense, jumped 3.9%, the best since June 2014.

US durable goods orders were expected to rise by 2.5% in January after a drop of 5% in December (before revisions). Core orders carried expectations for a rise of 0.2% after a drop of 1% beforehand. Jobless claims were expected to rise from the lows of 262K to 270K this week.

Towards the release the US dollar weakened against all the currencies except the Japanese yen.

Currency reaction

EUR/USD traded around 1.1030, in the higher end of the 1.0960 to 1.1070 range, despite a miss in inflation figures. Afterwards, it is sliding towards 1.10.

GBP/USD was recovering from the Brexit talk on OK GDP and advanced towards 1.40. Cable is backing off 1.40 and trades around 1.3950.

USD/JPY drifted higher towards 112.50 and advances to 112.65.

USD/CAD is at the lowest level in quite some time, just around $36, as oil prices are sliding. The pair is at 1.3635.

AUD/USD trades around 0.7214, under resistance at 0.7220, and also recovering. 0.7220 certainly works as resistance.

NZD/USD is at the top end of the range, under resistance at 0.67. The pair sliding

All in all, we are seeing the dollar advance nicely. The good is in juxtaposition to the very bad figures released yesterday.

Background

Core durable orders are important as they reflect long term investment rather than only the current state of the economy. They also feed into the GDP calculations. The first quarter of 2016 is expected to enjoy a rebound in economic activity after a poor fourth quarter.