EURUSD: PCE and Durable Goods Orders Disappoint USD Bulls

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Written By: Alejandro Zambrano
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    Summary:
  • The EURUSD had hardly changed five minutes following the release of US durable goods orders data and inflation figures, and is at risk of trading higher.

The EURUSD had hardly changed five minutes following the release of US durable goods orders data and inflation figures. As an aggregate, the numbers were a bit better than projected by economist, but the surprise was not strong enough to cause a significant reaction in EURUSD position.

As it stands right now, the EURUSD pair might continue its uptrend from the London morning as the risk-reward ratio for new short positions at current levels is not good. Instead, I suspect the EURUSD pair might need to rise to 1.0986 before potentially heading lower. The downtrend will remain intact as long as the price trades below the September 24 high of 1.1028.

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US Inflation and Durable Goods orders beat expectations

  • Annual US Core PCE increased by 1.8 YoY vs. the 1.8% projected, while annual headline PCE rose by 1.4% vs. the 1.3% expected by economists.
  • Durable goods orders beat expectations and increased by 0.2% MoM vs. the -1% anticipated, while Durable goods orders excluding transportation increased by 0.5% vs. 0.2% projected.

Annual US headline inflation reached a low of 1.3% in the second quarter of the year and has bounced to 1.4% since then. Today’s reading beat expectations but leaves the annual rate unchanged, and far away from the Federal Reserve’s 2% target. Today’s inflation figures should, therefore not alter the current stance of the Fed’s monetary policy.

Durable goods orders are recovering after dropping sharply from a multi-year high in September 2018 to lows not seen since April 2017. Today’s gain in the index supports the idea that the US economy might not be as bad as suggested by some. However, today’s economic data does necessarily reflect on what might happen in the months ahead if the US and China trade wars cause higher tariffs.

Written By: Alejandro Zambrano

Alejandro Zambrano combines extensive professional experience and a pragmatic attitude to trading, building clients’ understanding of the markets and the rationale behind investing. Zambrano was the Chief Market Strategist of the FCA regulated broker, Amana Capital. Prior to that, he was also the Head Analyst at FXCM’s London research desk. Interact with Alex via Twitter at @AlexFX00.

Published by
Written By: Alejandro Zambrano