Bullish US Dollar Undermined by Shaky October Durable Goods Orders

Talking Points:

- Durable Goods Orders beat analyst estimates by 1.0%.

- Durables Ex Transportation October reading contracts -0.9%.

- EURUSD runs to fresh session highs.

The US Durable Goods Orders for October beat analyst estimates of -0.6% m/m with a headline reading of +0.4% m/m. Conversely, the Durables ex Transportation reading, considered the core of the report, contracted -0.9% versus analyst estimates of 0.5%, which is the largest contractionary reading of 2014. A closer look at the data shows that the headline figure was boosted by increased military spending.

Yesterday’s US GDP report for Q3 reported the inventory-to-sales ratio is hovering near an all-time low, which could indicate large corporations avoidance of over production by meeting demand with controlled increases in production. Thus, the fact that the inventory-to-shipments ratio increased slightly per the Durable Goods report could be an indication of corporate confidence in the financial health of the American consumer as the US approaches the retail heavy holiday season.

Here’s a summary of the data this morning that’s put a halt on the US Dollar’s rally:

- Durable Goods Orders (OCT): +0.4% versus -0.6% expected, from -1.3% (revised to -0.9%).

- Durables ex Transportation (OCT): -0.9% versus 0.5% expected, from -0.2% (revised to +0.2%).

- Cap Goods Orders Nondef Ex Air (OCT): -1.3% versus 1.0% expected, from -1.7% (revised to -1.3%).

- USD Initial Jobless Claims (NOV 22): 313K versus 288K expected, from 291K (revised to 292K).

See the US Dollar economic calendar for this week's important events.

EURUSD 1-minute Chart: November 26th, 2014 Intraday

Charts Created using Marketscope – prepared by Tyler Amend

EURUSD charged to a high of $1.2508 on the back of the mixed economic data out of the US at 13:30 GMT. The pair has since retraced some of its gains and was last quoted at 1.2490, at the time this report was written.

Read more: EUR Short Covering Elusive as More Talk of QE Inspires Bears

--- Written by Christopher Vecchio, Currency Strategist and Tyler Amend, DailyFX Research

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