Market News

U.S. Durable Goods Plummet, Dollar Index Strong

U.S. goods plummet dollar

U.S. durable goods orders plummet, dollar strengthens; RBNZ expected to hold rates; GDP release anticipated.

In a surprising turn of events, orders for durable goods in the United States took a steep dive, plunging 6.1% month-over-month in January. This decline, which exceeded the anticipated 4.5% drop, marks the sharpest monthly decrease since April 2020. The primary driver behind this downturn was the transportation equipment sector, which experienced a notable 16.2% decline compared to the previous month.

Simultaneously, The latest survey by the Conference Board on consumer confidence somberly portrays the U.S. economy. The index retreated in February, slipping from 110.9 the previous month to 106.7. This broad-based decline affected nearly all income brackets, underscoring the persistent uncertainty looming over the nation’s economic landscape.

Despite the gloomy data, the dollar index (DXY) climbed overnight, soaring from 103.65 to 103.92.

U.S. Durable Goods Plummet, Dollar Index Strong

Implications for the Asia Session

The market anticipates the Reserve Bank of New Zealand (RBNZ) will maintain its official cash rate at 5.5%, with inflation well above target. Both headline and core CPI readings for the fourth quarter of 2023 stood at 4.7% and 4.4%, respectively, annually. A hawkish tone communicated during Governor Adrian Orr’s statement and press conference could be a bullish catalyst for the New Zealand dollar (NZD).

Dollar Index (DXY) Outlook

The spotlight remains on the preliminary estimate for GDP growth in the first quarter of 2024, slated for release today. Forecasts suggest economic activity will expand by 3.3% on an annual basis. A higher-than-anticipated GDP estimate could fuel increased demand for the dollar, continuing its recent ascent.

Central Bank Notes

The Federal Reserve maintained the Federal Funds Rate target range unchanged at 5.25% to 5.50%, marking the fourth consecutive meeting without alteration. Despite indicators pointing to solid economic expansion, the Committee remains cautious, emphasizing the need for sustained progress toward its inflation target.

Next 24 Hours Bias

The outlook for various currencies and commodities in the upcoming 24 hours presents a mix of bullish, bearish, and neutral sentiments. Factors such as GDP releases, central bank decisions, and oil inventory data will likely shape market dynamics, influencing trading strategies across global financial markets.

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