– U.S. Durable Goods Orders to Decline for First Time Since July 2013
– Demands for Durable Goods Increased Six Times in 2013
Trading the News: U.S. Durable Goods Orders
Demands for U.S. Durable Goods are expected to contract 2.0% in October and a marked slowdown in private sector consumption may drag on the dollar as it limits the Fed’s scope to taper the asset-purchase program at the December 17-18 meeting.
What’s Expected:
Time of release: 11/27/2013 13:30 GMT, 8:30 EST
Primary Pair Impact: EURUSD
Expected: -2.0%
Previous: 3.7%
DailyFX Forecast: -3.0% to 2.0%
Why Is This Event Important:
With the ongoing discussion at the Fed to scale back on quantitative easing, data pointing to a slower recovery may prompt the central bank to undermine the taper-timeline laid out by Chairman Ben Bernanke, and the committee may present a greater argument to carry its highly accommodative policy stance into 2014 should the fundamental developments coming out of the U.S. economy dampen the outlook for growth and inflation.
Expectations: Bearish Argument/Scenario
Release
Expected
Actual
Consumer Confidence (NOV)
72.6
70.4
U. of Michigan Confidence (NOV P)
74.5
72.0
Domestic Vehicle Sales (OCT)
11.90M
11.73M
The ongoing weakness in household sentiment may ultimately produce a larger-than-expected decline in U.S. Durable Goods, and a dismal print may spur a selloff in the reserve currency as it raises the Fed’s scope to retain its current policy for an extended period of time.
Risk: Bullish Argument/Scenario
Release
Expected
Actual
Advance Retail Sales (MoM) (OCT)
0.1%
0.4%
Wholesale Trade Sales (MoM) (SEP)
0.3%
0.6%
Personal Income (SEP)
0.3%
0.5%
However, the pickup in wage growth along with the resilience in private sector consumption may pave the way for a positive outcome, and third consecutive rise in Durable Goods may strengthen the argument to taper the asset-purchase program as the U.S. economy gets on a more sustainable path.
Potential Price Targets For The Release
Join DailyFX on Demand to Cover the U.S. Durable GoodsReport LIVE
Chart – Created Using FXCM Marketscope 2.0
Retains November Range; Carving Head-and-Shoulders Top?
Relative Strength Index Retains Bullish Momentum
Interim Resistance: 1.3530 (61.8% expansion) to 1.3580 (23.6% retracement)
Interim Support: 1.3290 (50.0% retracement) to 1.3300 Pivot
How To Trade This Event Risk(Video)
Bearish USD Trade: Orders for Durable Goods Contract 2.0% or Greater
Need green, five-minute candle following the report to consider a long EURUSD trade
If the market reaction favors a bearish dollar trade, establish long EURUSD with two position
Set stop at the near-by swing low/reasonable distance from entry with at least 1:1 risk-to-reward
Move stop to breakeven on remaining position once initial target is met; set reasonable limit
Bullish USD Trade: Demands Increase for the Third Straight Month
Need red, five-minute candle following the release to look at a short EURUSD entry
Implement same setup as the bearish USD trade, just in opposite direction
Impact that the U.S. Durable Goods Orders report has had on USD during the last month
Period
Data Released
Estimate
Actual
Pips Change
(1 Hour post event )
Pips Change
(End of Day post event)
SEP 2013
10/25/2013 12:30 GMT
2.5%
3.7%
+14
+21
September 2013 U.S. Durable Goods Orders
Although U.S. Durable Goods orders beat estimates of 2.3% coming in at 3.7%, Ex Transport and Cap Orders Nondef Ex Air missed estimates by over 2%. In the ‘bad news is good news’ psyche, EUR/USD saw some chop before heading higher as the trading week came to a close. As for some fundamentals behind this Wednesday’s print, it is important to note that Caterpillar sales for October fell 12% vs. a 9% fall in September while massive Boeing orders from the Dubai Airshow will not be accounted for until the November print. Although the reading is estimated to come in at -2.0%, we have seen October data come in better than economists have expected as the US government shutdown impact has been relatively muted in data.
— Written by David Song, Currency Analyst
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
