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Dollar Pulled Down By Poor Durable Goods Orders
By Grace Cheng on March 26, 2008 | More Posts By Grace Cheng | Author's Website
US durable goods orders for February are quite bad, with overall orders down 1.7% instead of the expected 0.8% rise, while orders excluding transport equipment fell 2.6%. Although this was an improvement from the 4.7% drop in January, it was still worse than expected. The current housing slump and the prospect of a recession made companies reluctant to invest in machinery. Meanwhile, new US home sales in February fell to a 590,000 annual pace, the lowest level since February 1995. Purchases were down 30% from a year ago. Although these numbers are slightly better than expected (580,000 expected), they were 1.8% lower than January’s.
It’s Brighter In Eurozone
Both the German and French sentiment surveys came out better than forecast, highlighting Eurozone’s surprising strength amidst the sharp US economic downturn and high commodities prices. The German IFO business climate index rose to 104.8 in March from 104.1 in February, continuing the unexpected rises in the early months of the year. Hans-Werner Sinn, president of the IFO Institute, said in a statement, “These results indicate that with the beginning of the year the German economy has gained strength. Despite the strong Euro, firms are more optimistic regarding exports than they were in February.”
ECB President Jean-Claude Trichet on Wednesday delivered a hawkish message in his remarks to the European Parliament in Brussels. High inflation will last longer than expected in December and wage growth also stronger than previously assumed, he said. He indicated recent financial market turmoil has had no significant influence on financing conditions in the Eurozone so far. “There is little evidence (of) that,” Trichet said.
Forex Trading
EUR/USD rose almost 200 pips Wednesday to a session high around 1.5670, which is around the expected target between 1.5680-1.5700. USD/CHF has gone back down below parity to a session low around 0.9950 on US dollar weakness. USD/JPY is below 99.00 once more.
Thursday:
German Gfk consumer confidence 0710 GMT
UK CBI distributive trades 1100 GMT
US GDP, personal consumption, core PCE, initial jobless claims 1230 GMT
NZ GDP 2145 GMT
Japan National CPI 2330 GMT
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Dollar drops in value some more. Yay! We’re closer to “global” standard of living.
Makes Indian computer programmers more expensive. Yay!
Makes my job less likely to be outsourced. Yay!
Makes chinese junk at walmart more expensive. Don’t care! I can’t eat cheap electronics.
Makes my mortage payment worth less. Yay!
Makes CEO pay worth less. Yay!