Durable Goods Orders Preview: Figures to beat estimates, boosting the dollar

Durable Goods Orders are set to rise in November as an underestimation of previous months implies a potential for another upside surprise. Vaccine news and the conclusive US elections may have also boosted long-term investment, propelling the dollar, FXStreet’s Analyst Yohay Elam reports.

Key quotes

“Retail Sales took a hit last month, falling by 1.1%. Jobless claims also missed estimated and showed a worrying increase. Economists expect Durable Goods Orders to follow a similar path, with the headline rising by a moderate 0.6%, around half of October’s increase of 1.3%. The Nondefence ex-air component – aka ‘core of the core’ is forecast to advance by 0.6% a slowdown from 0.8% beforehand.”

“Core durables beat estimates in seven out of eight of the last releases and met expectations in the sole exception. The consensus has been too downbeat, opening the door for another upside surprise.” 

“On November 9, Pfizer and BioNTech announced a high efficacy rate for their COVID-19 vaccine. In the following week, Moderna followed suit with a similar outcome. Such upbeat developments may have pushed businesses to invest for the long-term, seeing the light at the end of the tunnel.” 

“If the assessment above is correct, there is room for an upside surprise and for the dollar to rise. A return to robust growth implies lower chances of the Federal Reserve buying more bonds. In case the data meets estimates, markets would likely return to scrambling around the latest news, most notably the new covid strain. In the unlikely case of an investment downfall, the dollar could be dragged lower on the expectation that the Fed increases its bond-buying scheme.”