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US Durable Goods Orders are forecast to continue their recovery but business managers are clearly hesitant to commit scarce resources to investment and personnel until the direction of the economy is certain. Joseph Trevisani, an analyst at FXStreet, believes the dollar is unlikely to gain from durable goods confirmation.

Key quotes

“Durable goods orders followed suit scoring 15.8% in May after losing 18.3% in April and 16.7% in March. That pace is expected to moderate to 6.5%in June though there is room for improvement, the May consensus estimate of 10.9% was understated by 44%. Orders outside of the transportation sector are expected to rise 3.5% after May’s 3.7% increase and a combined 10.1% loss in March and April. Non-defense capital goods ex-aircraft, a proxy for business spending, is predicted to climb 1.5% in June after the May 1.6% gain and March and April’s 7.9% loss.”

“It is possible that the continuation of heightened consumer spending in June may have unleashed business credit cards. But it is also possible and probably more understandable, considering the recent trauma, that managers will be very cautious in hiring and investment. The problem for the economy is that those spending decisions are the ones that return people to employment.”  

“For markets and the dollar durable goods will likely provide little new information. Even if considerably better than the forecast it will only confirm the retail figures. If it is unexpectedly worse then the recent dollar selling will look prescient.”