Trading the News: U.S. Durable Goods Orders

A 6.0% decline in orders for U.S. Durable Goods may prop up EUR/USD going into the end of the month as it dampens the outlook for growth and inflation.

Why Is This Event Important:

Another batch of mixed data prints may dampen the appeal of the greenback as it encourages the Federal Open Market Committee (FOMC) to carry the current policy into 2018.

Even though ‘the Committee expects to begin implementing its balance sheet normalization program relatively soon,’ Chair Janet Yellen may strike a more cautious tone at the Kansas City Fed Economic Symposium in Jackson Hole, Wyoming as many officials ‘saw some likelihood that inflation might remain below 2 percent for longer than they currently expected, and several indicated that the risks to the inflation outlook could be tilted to the downside.’ In turn, Chair Yellen and Co. may project a more shallow path for the Fed Funds rate at the next rate decision on September 20, with the U.S. dollar at risk of facing additional headwinds over the remainder of the year especially as the outlook for fiscal policy remains clouded with high uncertainty.

Impact that the U.S. Durable Goods Orders report has had on EUR/USD during the last release

Period

Data Released

Estimate

Actual

Pips Change

(1 Hour post event )

Pips Change

(End of Day post event)

JUN P

2017

07/27/2017 12:30:00 GMT

3.9%

6.5%

0

-24

June 2017 U.S. Durable Goods Orders

EUR/USD 5-Minute Chart

Demand for U.S. Durable Goods surged 6.5% in June to mark the larger advance since 2014, while Non-Defense Capital Goods Orders excluding Aircrafts, a proxy for business investment, fell 0.1% during the same period amid forecasts for a 0.3% rise. The mixed developments coming out of the U.S. economy may encourage the Federal Open Market Committee (FOMC) to retain the current policy throughout the remainder of the year as inflation continues to run below the 2% target. EUR/USD showed a limited reaction to the series of mixed data prints, but the pair tracked lower throughout the North American trade to end the day at 1.1675.