Intraday Market Thoughts

Durable US Disappointment and ECB Confusion

by Adam Button
Apr 25, 2013 0:06

A disappointing durable goods orders reports raised fresh questions about the US recovery but risk trades edged higher anyway while the Swiss franc continued to stumble. The upcoming session in Asia is devoid of economic data and Australia is on holiday.   We issued new Premium trades trading note on EURUSD alongside the latest MONTHLY chart. 1 new trade on USDJPY has been added to the existing long, while 1 new trade on GBPUSD and 2 new longs on GBPJPY ahead of Thursday's UK GDP report. 1 new trade on USDCAD along 2 new charts (weekly & monthly)( have also been cadded to highlight our case for USDCAD. All charts & trades are in the latest Premium Insights.

US durable goods orders dropped 5.7% in March compared to a 2.8% decline expected. The decline was compounded by a downward revision to the February data. The closely watched core orders component was less dramatic, rising 0.2% compared to a 0.3% rise expected but the numbers were soft enough to prompt several firms to revise Q1 growth forecasts lower.

It's a growing struggle to find any US indicators that point to an accelerating economy but the market remains uncertain and with the Fed printing, the path of least resistance for risk trades remains higher. USD/JPY touched 99.60 in US trading but it may not have the strength to break 100 with Japanese Golden Week holidays next week.

The question about whether the ECB will cut or not in May was made murkier by ECB VP Constancio. In some of his comments he indicated the central bank has limited tools at his disposal but then said the ECB still has some margin to act and that recent economic data was 'bad news'.
We also wonder if the latest EUR/CHF rally isn't partly due to speculation about Europe changing course on austerity. The designated Italian PM's first comments were about a new approach and the local press is filled with calls for fresh thinking.

Act Exp Prev GMT
Durable Goods Orders (MAR)
-5.7% -2.8% 4.3% Apr 24 12:30
Durable Goods Orders ex Transportation (MAR)
-1.4% 0.5% -1.7% Apr 24 12:30

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