USD Buoyed on Durable Goods Orders

USD Buoyed on Durable Goods Orders
by Korman Tam
5/28/2008 2:35:00 PM

The dollar extended its gains versus the euro and yen on Wednesday, but struggled to carry over that strength against the sterling and Aussie. US economic data released earlier today propped the greenback up near the 1.56-level against the euro and 105.29 versus the yen. Durable goods orders for April surprised to the upside, with the headline figure posting a 0.5% decline and beating calls for a drop of 1% versus a 0.3% decline in March. The excluding transportation orders surged by 2.5% compared with forecasts for a 0.5% decline and up from 0.9% the previous month.

The US economic calendar for Thursday consists of Q1 GDP, core PCE and weekly jobless claims. The Q1 GDP reading is expected to improve to 0.9% from 0.6%, while the GDP deflator is seen unchanged at 2.6%. Core PCE prices are also expected to hold steady at 2.2%. Weekly jobless claims are seen creeping back up to 370k from 365k a week earlier.

Minneapolis Fed President Gary Stern offered a downbeat assessment of the economy, saying the current downturn in housing appears more severe than in the early 90¡¯s. Stern said that US economic growth will likely be modest in the near-term and expects unemployment to rise somewhat. He said that overall inflation growth is clearly too rapid and attributed the increase to food and energy costs. Further, Stern tried to dissuade the assertion that energy prices and the dollar were linked.