US Durable goods for the month of April at 3.3%, more than double the consensus forecast of 1.5%. The key driver of this number looks to be growth in Aircraft manufacturing and non-defense capital goods such as computers and communications equipment.
This number lends itself to Bernanke’s comments earlier this week and the idea that the US economy is on the mend and could show constructive growth in the second half of 2013.
Guest post by David Starkey of the Cambridge Mercantile Group
Currencies however have taken the data in stride and are largely unchanged from ore-release levels. It looks like pre-holiday activity will dominate the American session as it has the European session.
The Loonie trading with an offered tone this morning, the USDCAD is in the upper part of its weekly range as investor concern hinders the Canadian unit. Markets seem cautious of the Canadian Dollar as investors worry that gains in riskier assets have outpaced real economic growth and oil prices decline for the second day. Crude prices are down this week on signs that supply stocks are rising and that a global economic slowdown will further hurt demand. The Loonie is also softer against the Euro as broad based demand for the common currency drives action in the pair.
The Asian session was choppy overnight following comments from Bank of Japan governor Kuroda in which he pledged that the BoJ would do more to stabilize financial and capital markets through flexibility in its bond buying program, but that he felt sufficient stimulus programs were in place. In classic fashion, markets responded with increased volatility. The Nikkei, following yesterday’s precipitous decline, traded up 3%, then down about 5%, before rallying to end the day, net up just shy of 1%- A turbulent day for Japanese equity traders to say the least. This action was reflected in the USDJPY, which traded largely in concert with the Nikkei: it rallied, it sold-off, and then stabilized back towards the mid-101 area at session close.
Turing to Europe, the common currency caught a bid from better than expected German business sentiment data and has reclaimed much of the ground lost in the aftermath of Bernanke’s testimony earlier this week. Broadly speaking, with a holiday long weekend in both the USA and UK, the European session has been characterized by lighter flows and consolidation. The Sterling, traded soft versus the EUR and the USD as data this week, specifically Retail Sales & CPI releases, consistently missed expectations, and has weighed on the currency.
Further reading: Central bank actions shake up currency markets
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