US Durable Goods Orders decline by 2.8% in July vs. -4% expected
- Durable Goods Orders in the US fell at a softer pace than expected in July.
- The US Dollar Index stays in negative territory below 98.50.
New orders for manufactured Durable Goods in the United States (US) declined by 2.8%, or $8.8 billion, in July to $302.8 billion, the US Census Bureau reported on Tuesday. This reading followed the 9.4% decrease reported in June and came in better than the market expectation for a decrease of 4%.
"Excluding transportation, new orders increased 1.1 percent," the press release read. "Excluding defense, new orders decreased 2.5 percent. Transportation equipment, also down three of the last four months, drove the decrease, $10.9 billion or 9.7 percent to $101.7 billion."
Market reaction to US Durable Goods Orders data
The US Dollar (USD) stays under modest bearish pressure. At the time of press, the USD Index was down 0.25% on the day at 98.18.
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the weakest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.29% | -0.26% | -0.34% | -0.11% | -0.14% | -0.12% | -0.13% | |
| EUR | 0.29% | 0.09% | 0.09% | 0.19% | 0.21% | 0.42% | 0.20% | |
| GBP | 0.26% | -0.09% | 0.00% | 0.12% | 0.17% | 0.31% | 0.10% | |
| JPY | 0.34% | -0.09% | 0.00% | 0.15% | 0.06% | 0.36% | -0.01% | |
| CAD | 0.11% | -0.19% | -0.12% | -0.15% | -0.02% | 0.19% | -0.16% | |
| AUD | 0.14% | -0.21% | -0.17% | -0.06% | 0.02% | 0.01% | -0.16% | |
| NZD | 0.12% | -0.42% | -0.31% | -0.36% | -0.19% | -0.01% | -0.22% | |
| CHF | 0.13% | -0.20% | -0.10% | 0.01% | 0.16% | 0.16% | 0.22% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
This section below was published as a preview of the US Durable Goods Orders data at 10:39 GMT.
US Durable Goods Orders data Overview
The United States (US) Durable Goods Orders for July is due for release today at 12:30 GMT. The Census Bureau is expected to show that fresh orders for durable goods have declined again, but at a moderate pace of 4%. In June, Durable Goods Orders contracted by 9.3%.
The Durable Goods Orders data measures the cost of orders received by manufacturers for durable goods. Costs for durable goods are influenced by change in labor or raw material costs or both. Generally, an increase in cost of discretionary goods prompts inflation and forces the Federal Reserve (Fed) to turn hawkish on the interest rate outlook. Alternately, declining durable goods cost reflects cooling price pressures, which allow the Fed to turn dovish on policy rates.
How could the US Durable Goods Orders data affect EUR/USD?
EUR/USD ticks up to near 1.1650 during the European trading session on Tuesday as the US Dollar (USD) faces selling pressure. The US Dollar ticks down after the announcement of Fed Governor Lisa Cook’s termination by US President Donald Trump in a letter posted on Truth.Social.
On the daily timeframe, EUR/USD trades close to the downward-sloping trendline plotted around 1.1740 from the July’s high at 1.1830. The major currency pair trades close to the 20-day Exponential Moving Average (EMA) around 1.1644, indicating a sideways trend.
The 14-day Relative Strength Index (RSI) oscillates inside the 40.00-60.00 range, suggesting indecisiveness among investors.
A fresh upside move in the pair would be seen to near July’s high at 1.1830 and the round-level resistance of 1.1900 if it breaks above Friday’s high of 1.1740.
On the flip side, a downside move by the pair below Friday’s low of 1.1583 will expose it to the August 5 low of 1.1528, followed by the August 1 low of 1.1392.
US Dollar FAQs
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
Author
Sagar Dua
FXStreet
Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.
