U.S. Core Durable Goods Orders Figure Boosted USD To New Highs

 | Nov 24, 2016 09:23AM ET


Daily Market Analysis: 24 November 2016

Overview

US dollar

The better-than-expected US Core Durable Goods Orders figure has boosted the US dollar to the new highs and reignited the greenback’s rally to the upside as new record highs were recorded for the major currency after two days of consolidation. The core Durable Goods orders were expected at 0.2% while the actual change in the total value of October’s new orders came out at 1%, the highest figure since July 2016.

However, October’s US New Home Sales dropped by almost 2%, with September’s figure being revised downwards by 19K. The market remained unchanged during the announcement of the decreased Home Sales as it was still appreciating the extraordinary growth on the Goods Orders at that time.

As expected, November’s FOMC meeting minutes did not cause significant volatility to the forex markets since the meeting was held before the US Presidential Elections and thus Fed’s members were not too decisive on their views and steps in view of an uncertain environment. The minutes revealed the slightly hawkish Fed’s favorite statement of the last few month; if the economic data, including jobs creation and growth, continue improving, then the rate hike will be deemed necessary “relatively soon”.

The media are still indicating a mean likelihood of 95% for the rate hike with the Fed funds probability lying at 93.5%. Since it is almost certain that the Fed will raise the rates in December, we do not expect the US dollar to gain further upside stimulus upon the possible rate hike announcement. However, we would expect investors to pay attention to the policy statement of the meeting.

The biggest loser of the day against the US dollar was the Japanese yen that has sunk by 1.25%; the Gopher reached the record high price level of 113 yesterday and it is currently moving around this psychological level at the time of writing. The only currency out of the G7 that almost managed to close the day unchanged against the strong US dollar was the British pound.