- Durable Goods Orders in the US rose unexpectedly in August.
- US Dollar Index stays in positive territory above 98.00.
New orders for manufactured durable goods orders in the US rose 2.9%, or $8.9 billion, to $312.1 billion in August, the US Census Bureau reported on Thursday. This reading followed the 2.7% decrease (revised from -2.8) recorded in July and came in better than the market expectation of -0.5%.
“Excluding transportation, new orders increased 0.4%,” the press release read. “Excluding defense, new orders increased 1.9%. Transportation equipment, also up following two consecutive monthly decreases, led the increase, $8.1 billion or 7.9% to $110.2 billion.”
Market reaction to US Durable Goods Orders
The US Dollar (USD) gathers strength following the upbeat data. At the time of press, the USD Index was trading at its highest level since early September at 98.10, rising 0.25% on the day.
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the British Pound.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.25% | 0.41% | 0.16% | 0.06% | 0.28% | 0.24% | 0.35% | |
| EUR | -0.25% | 0.15% | -0.09% | -0.19% | 0.06% | -0.01% | 0.10% | |
| GBP | -0.41% | -0.15% | -0.20% | -0.34% | -0.11% | -0.13% | -0.02% | |
| JPY | -0.16% | 0.09% | 0.20% | -0.14% | 0.07% | 0.22% | 0.18% | |
| CAD | -0.06% | 0.19% | 0.34% | 0.14% | 0.25% | 0.21% | 0.33% | |
| AUD | -0.28% | -0.06% | 0.11% | -0.07% | -0.25% | 0.25% | 0.05% | |
| NZD | -0.24% | 0.00% | 0.13% | -0.22% | -0.21% | -0.25% | -0.15% | |
| CHF | -0.35% | -0.10% | 0.02% | -0.18% | -0.33% | -0.05% | 0.15% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
This section below was published as a preview of the US Durable Goods Orders at 10:30 GMT.
US Durable Goods Orders data Overview
The United States (US) Durable Goods Orders data for August is due for release today at 12:30 GMT. The Census Bureau is expected to show that fresh orders for durable goods have declined for the third time in a row. However, the pace of decline is expected to be moderate at 0.5%, compared to a 2.8% contraction seen in July. The Durable Goods Orders data measures the cost of orders received by manufacturers for durable goods.
Costs for durable goods are influenced by the change in labour or raw material costs, or both. Theoretically, an increase in the cost of discretionary goods prompts inflation and forces the Federal Reserve (Fed) to turn hawkish on the interest rate outlook. Alternatively, declining durable goods’ cost reflects cooling price pressures, which allow the Fed to turn dovish on policy rates.
How could the US Durable Goods Orders data affect EUR/USD?
EUR/USD trades with caution near 1.1750 during the European trading session. The major currency pair resumes its downside journey on Wednesday after a two-day recovery move to near 1.1820. The pair has been under pressure as the US Dollar (USD) trades firmly, following the monetary policy announcement by the Fed last week.
The major currency pair trades close to the 20-day Exponential Moving Average (EMA), which is around 1.1744, suggesting that the near-term outlook is uncertain.
The 14-day Relative Strength Index (RSI) oscillates inside the 40.00-60.00 range, indicating a sideways trend.
Looking up, the EUR/USD pair could rise towards the psychological level of 1.2000 if it breaks above the four-year high around 1.1920. On the downside, the September low around 1.1600 will be a key support zone for the pair in case the pair extends its downside below the September 12 low of 1.1700.
US Dollar FAQs
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022.
Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates.
When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system.
It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
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