If the Fed needed reasons not to raise rates, it got a last minute argument. Durable goods orders crashed by 4% in June and this came on top of a downwards revision for May: -2.8% instead of 2.3% originally reported. Core orders fell by 0.5%, instead of a rise expected. And also here, we have a downwards revision of the previous figure from -0.3% to -0.4%. A silver lining comes from the measure that excludes defense and air and this comes out at +0.2% as predicted. However, also here we have a small downwards revision from -0.4% to -0.5%.
The US dollar is reacting negatively and sliding. The moves are not huge, though: EUR/USD rises from 1.0990 to 1.1003, USD/JPY is slipping in a similar manner and also GBP/USD is ticking up.
The data not only impacts the Fed but also the GDP release published on Friday. The figure is for June, the last month of Q2. This ends a winning streak for US data.
Durable goods orders were expected to drop by 1.1% in June after a fall of 2.3% in May (before revisions). Core orders carried expectations for a rise of 0.3% after a drop of the same scale.
The US dollar was stable ahead of the release. Only USD/JPY was on the move, jumping up and down on confusing reports about the BOJ’s potential action on Friday.
This release is important as it reflects investment. The policy horizon of the Fed is beyond the month to month movements. The Fed is convening and will release its decision later today. No change is expected in the interest rate but hints about future moves in September or more likely in December are on the cards.
In general, Yellen and co. have positive US data on one hand against global worries on the other.
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