Hawkish ECB commentary knocked USD lower in London before the dollar was rescued by a stronger than expected read on US July durable goods orders, which saw DXY gain as much as 0.7% from its lows before cooling slightly in late NY. DGOs rose firmly in July plus June was revised higher. US equities took heart from this report too, along with Pimco's plans for a $5bn distressed debt fund and reports of improved profitability on new loans at the GSEs. Oil prices were volatile but clearly higher near the NY close. The New Zealand dollar was little changed overall, gyrating in a 0.6970 - 0.7047 range, drifting into the local session around 0.7010.
AUD/USD followed the broad USD trend, grinding up to a high of 0.8639 in London, reversing to as low as 0.8533 and bouncing once more to the 0.8585 area.
AUD/USD followed the broad USD trend, grinding up to a high of 0.8639 in London, reversing to as low as 0.8533 and bouncing once more to the 0.8585 area.
ECB hawk Weber declared that it is premature to talk of lower interest rates in the Eurozone and judged rates to be still on the accommodative side. EUR/USD rose about 50 pips to its 1.4777 high before the US data knocked it lower.
Firmer equities put a bid tone under USD/JPY from a London low of 108.70 to 109.50/60 in late NY, with about 50 pips of the gains coming on the durable goods data.
US durable goods orders surged 1.3% in July, bucking expectations of a reversal of the 0.8% June gain (which was revised even higher to 1.3%). The highlights were a continued rise in vehicle assemblies following the end of the auto workers' strike in late May and a rise in plane orders for Boeing, but the ex-transport measure also recorded a solid 0.7% gain following a 2.4% rise in June. These figures are consistent with our view that the second estimate of Q2 GDP (published tonight) will be revised from 1.9% to 3.0% annualised.
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