U.S. Session Recap – March 27, 2014

  • U.S. Feb headline durable goods orders up by 2.2% vs. 1.1% consensus
  • U.S. Feb core durable goods orders show 0.2% uptick vs. 0.3% consensus
  • U.S. Jan headline and core durable goods orders data revised lower
  • U.S. flash services PMI stronger than expected at 55.5 from 53.3
  • New Zealand reports higher than expected trade surplus of 818M
  • Five U.S. banks fail Fed stress tests

First, the good news. Data from the U.S. economy came in mostly stronger than expected, with the Feb core durable goods orders figure coming in close to consensus with its 0.2% uptick and the headline figure showing a higher than expected 2.2% increase. The flash services PMI also printed good results, as the figure climbed to 55.5 from an upwardly revised 53.3 reading.

Now for the bad news… The Greenback wasn’t able to draw any support from these upbeat figures at all! Well, the U.S. did have its fair share of bleak data, as the January headline and core durable goods orders data suffered downward revisions while the Fed’s bank stress test results showed that five U.S. banks failed. But what really drove the U.S. dollar lower against most of its counterparts was the U.S. bond auction, which revealed a rapidly flattening yield curve. This basically means that short-term investors are pricing in a rate hike but long-term investors are still forecasting weak growth and low inflation.

A few hours ago, New Zealand reported a larger than expected trade surplus of 818 million NZD versus the estimated 595 million NZD reading. However, the previous period’s surplus was downgraded from an initially reported 306 million NZD reading to just 286 million NZD. The Kiwi popped above the .8600 handle against the dollar on the release but is currently consolidating around that psychological level.

There are no major reports lined up for the rest of the Asian trading session, which suggests that most forex pairs could move to the tune of risk sentiment. Do take note that the Nikkei appears to be shaping up for another day in the red, which might weigh on USD/JPY and the rest of the yen pairs.

See also:

London Session Recap

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