Dollar Recovers Amid Durable Goods Orders, Markets Volatile

After somewhat better-than-expected durable goods orders, the dollar is recouping some of this week’s losses in the US session. However, the strength of the rebound has been quite weak thus far. Markets remain in a volatile state as well.

The durable goods orders report for July, which was released on Wednesday, revealed a mixed picture. As per Wells Fargo analysts, the 0.1 percent drop in durable goods orders is not as significant as had been projected. Officials added that the better-than-expected result is attributable in part to increased orders for automobiles and a variety of old-line industrial segments.

In July, US durable goods orders fell -0.1 percent, mom, to USD 257.2 billion, which was better than the -0.2 percent mom forecast. Ex-transport orders increased by 0.7 percent mom, exceeding the 0.5 percent mom forecast. Ex-defense orders fell by -1.2 percent this year. The value of transportation equipment fell by 2.2 percent to USD 75.3 billion.

Nevertheless, investors are becoming apprehensive as they watch for Fed Chair Jerome Powell’s Jackson Hole address to stimulate the economy.

US Dollar Index Strives To Retain an Upward Trend

Also in the day, the IFO Survey revealed that the Business Climate Index fell to 99.4 in August from 100.7 in July, according to the IFO Survey. Also on plus side, the Current Assessment Index increased slightly from 100.4 to 101.4. These contradictory assessments failed to elicit a market response.

Even though the news was mostly disregarded by market players, the steep increase in US Treasury bond yields helped the dollar beat its competitors. The US Dollar Index (DXY) reached a daily high of 93.12, with the benchmark 10-year US T-bond yield up more than 3% on the day.

However, the DXY has lost steam as investors appear to be pulling out of the market to wait for FOMC Chairman Jerome Powell’s address at the Jackson Hole Symposium on Friday. On the other side, according to the US Census Bureau’s monthly report, durable goods orders in the United States fell 0.1 percent, or $0.4 billion, to $257.2 billion in July, contrary to experts’ expectations of a 0.3 percent loss.