Durable Goods Orders Show Net Positive for the Economy

USD

The U.S. dollar once again held quiet ranges overnight ahead of top tier data slated for release this morning.  The EUR/USD has maintained a boring, tight 0.8% range over the past two weeks but near the weakest level for Euro since March.  Overall, the Bloomberg Spot Dollar Index is less than 1.0% from its highest level in seven months.

On the surface, today’s Durable Goods print was disappointing but a deeper look reveals positive signs for the U.S. economy.  Headlines orders fell 0.1% in September, failing to meet expectations of a flat reading.  However, August’s number was upwardly revised to 0.3%, from 0.1%.  Once volatile transportation orders are excluded, orders rose 0.2% in September, right in line with expectations.   The August reading was also upwardly revised to 0.1 from minus 0.2%.

A separate report showed weekly jobless claims continue to average near the best levels in four decades. Later, pending home sales are expected to have shown an expansion of 1.0% in September, up from minus 2.4% in August.

GBP

The British pound was unable to take advantage of strong growth data and has opened this morning with a softer tone.  The Sterling initially gained overnight after a report showed that the country’s third quarter domestic product grew 0.5% in the third quarter, beating expectations of a 0.3% expansion.  The service sector drove expansion by adding 0.8%.  The manufacturing sector continues to be a drag on the economy but the lower pound should help exports and boost the sector over the coming months.  Nevertheless, political uncertainty is weighing heavily on the currency so even strong data seems unable to change the pound’s fortunes.

SEK

The Swedish krona slipped again overnight, falling nearly 1.0% against the U.S. dollar after the central bank indicated it is prepared to extend bond purchases.  Riksbank kept its interest rate at minus 0.5% and refrained from adding to its record stimulus, according to a statement released today.  However, the central bank said it stands prepared to extend bond purchases into next year.  Riksbank Governor Stefan Ingves also held a bearish tone while saying rates won’t be raised higher until 2018 at the earliest and the likelihood of a further rate cut has increased.

As a result, the Swedish is now trading at its weakest level against the greenback since early 2003.