– U.S. Durable Goods Orders to Increase for Second Month.
– 7.1% Rise Would Mark Fastest Pace of Growth Since March 2011.
For more updates, sign up for David’s e-mail distribution list.
Trading the News: U.S. Durable Goods Orders
A 8.0% rise in demand for U.S. Durable Goods may spur a bullish reaction in the greenback (bearish EUR/USD) as it raises the scope for a stronger recovery in the second-half of 2014.
What’s Expected:
Click Here for the DailyFX Calendar
Why Is This Event Important:
It seems as though the Federal Open Market Committee (FOMC) is running out of arguments to retain its highly accommodative policy stance amid the ongoing improvements in the world’s largest economy, and the bullish sentiment surrounding the dollar may gather pace throughout the coming months should we see a growing number of central bank officials adopt a more hawkish tone for monetary policy.
For LIVE SSI Updates Ahead of the U.S. GDP Print, Join DailyFX on Demand
Expectations: Bullish Argument/Scenario
Release
Expected
Actual
Gross Domestic Product (Annualized) (QoQ) (2Q A)
3.0%
4.0%
Personal Consumption (2Q A)
1.9%
2.5%
Consumer Confidence (JUL)
85.4
90.9
The pickup in household sentiment along with the resilience in private sector consumption may generate increased demand for U.S. Durable Goods, and a positive print may heighten the bullish sentiment surrounding the dollar as it raises the outlook for growth and inflation.
Risk: Bearish Argument/Scenario
Release
Expected
Actual
Consumer Price Index Core (YoY) (JUL)
1.9%
1.9%
Consumer Credit (JUN)
$18.650B
$17.255B
Average Hourly Earnings (YoY) (JUL)
2.2%
2.0%
However, sticky inflation paired with subdued wage growth may drag on demand for large-ticket items, and a dismal development may serve as a fundamental catalyst to spur a larger correction in the reserve currency as it weighs on interest rate expectations.
How To Trade This Event Risk(Video)
Bullish USD Trade: Orders Increase 8.0% or Greater
Need to see red, five-minute candle following the release to consider a short trade on EURUSD
If market reaction favors a long dollar trade, sell EURUSD with two separate position
Set stop at the near-by swing high/reasonable distance from entry; look for at least 1:1 risk-to-reward
Move stop to entry on remaining position once initial target is hit; set reasonable limit
Bearish USD Trade: Durable Goods Report Disappoints
Need green, five-minute candle to favor a long EURUSD trade
Implement same setup as the bullish dollar trade, just in the opposite direction
Potential Price Targets For The Release
Chart – Created Using FXCM Marketscope 2.0
Downside targets remain favored as long as RSI holds in oversold territory
Interim Resistance: 1.3510 (38.2% expansion) to 1.3520 (38.2% retracement)
Interim Support: 1.3140 (38.2% retracement) to 1.3150 Pivot
Read More:
AUDCHF Gap Setup- 8545 Resistance Critical
Gold Vulnerable As Safe-Haven Demand Ebbs, Crude Awaiting Fresh Cues
Impact that the U.S. Durable Goods report has had on EUR/USD during the last release
Period
Data Released
Estimate
Actual
Pips Change
(1 Hour post event )
Pips Change
(End of Day post event)
JUN
2014
07/25/2014 12:30 GMT
0.5%
0.7%
– 4
– 8
June 2014 U.S. Durable Goods Orders
Orders for U.S. Durable Goods accelerated at a rate of 0.7% in June, exceeding estimates for 0.5% rise. The print was also much better than that in May, which showed a revised 1.0% contraction. The strength mainly came from increase in demand for commercial aircraft and machinery. However, the better-than-expected figure had a limited impact on the dollar. During the rest of the North America trade, the EUR/USD fluctuated around 1.3430 and closed at 1.3429.
— Written by David Song, Currency Analyst and Shuyang Ren
To contact David, e-mail dsong@dailyfx.com. Follow me on Twitter at @DavidJSong.
To be added to David’s e-mail distribution list, please follow this link.
Trade Alongsidethe DailyFX Team on DailyFX on Demand
Looking to use the DailyFX Trade Signals LIVE? Check out Mirror Trader.
New to FX? Watch this Video
Join us to discuss the outlook for the major currencies on the DailyFXForums
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.Learn forex trading with a free practice account and trading charts from FXCM.
Source: Daily fx