US Durable Goods Orders Preview, expected reactions

The final piece of relevant data for the greenback this week is Durable Goods Orders for April, with the headline reading expected to post a drop of 1.4%, but the more relevant core figure that excludes volatile transportations orders seen picking up from previous 0.0% to 0.5%.

However, the headline forecast seems a bit too discouraging, considering that the April ISM Manufacturing PMI indicated that economic activity in the sector expanded for the 108th consecutive month, with the index printing a healthy 57.3,  below the previous 59.3. The report also showed that The New Orders Index registered 61.2 slightly below March reading of 61.9. Both numbers suggest that orders may somehow moderate slightly in April, but as said, a  -1.4% from a previous 2.6% could be a too pessimistic forecast.

In the meantime, the Dollar Index has been surging for the past five weeks and is poised to finish this sixth one also with gains, and at fresh yearly highs.

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The report tends to have a strong impact on the market, although these days, eyes are landed on equities and yields, which reflect markets' positive/negative mood. Sentiment can easily overshadow macroeconomic data, except maybe that directly linked to central banks' decisions, inflation and employment.

Nevertheless, and with the dollar favored by market players, a better-than-expected figure should see the American currency appreciating strongly, particularly against its weakened European rivals, while a disappointing one, won't be enough to trigger a rally in EUR or GBP, but may push the JPY higher, already strong on safe-haven demand.