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Strong US Durable Goods Orders

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The US Census Bureau has just released the Durable Goods numbers for the month of February. The headline Durable Goods Orders data has come in at 2.2%, this is well up on the January reading of -1% easily beats the consensus estimate of 1%. The Durable Goods Orders ex-Transportation number however has slightly fallen back to 0.2%, this is down from 1.1% in January and misses expectations for a figure of 0.3%.

The Durable Goods Orders number is considered an important indicator for the US economy. By tracking the demand for goods that are expected to last three years or longer it captures both current economic conditions and long term consumer sentiment.

It seems that no matter what figure would have been published this morning the markets would have taken it in their stride. US Stock indexes appear to have no intention of backing off their lengthy and stable run up to these record highs. On the contrary the US Dollar is seriously struggling to post any gains regardless of the quality or positive nature of US data releases.

The Dollar Index (DXY) has been toying with it’s 12 month lows of 0.79 where it has at least found some support. Short term the USD has made some advances, gaining enough ground to take it just above 0.80. These minor gains however in no way reflect the solid nature of the recovery in the US, nor do they seem to take account of the recent spate of positive data releases around the US economy.

The cautious nature of the Fed is in some way responsible for the reactions of both the equity and currency markets. Loose monetary policy is encouraging investors to seek yield in either the US stock markets or the money markets of economies where the more reactionary attitude of the their Central Banks are raising yield curves above that of the US.

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