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Durable Goods Inline -Offer No Lift to Risk

Last updated 10/28/2009 8:53 AM ET (GMT -5) 8 Comments

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Boris Schlossberg

Director of Currency Research, GFT

US Durable Goods orders matched market expectations rising 1.0% in the month of September. Ex transportation Durable Goods increased 0.9% versus 0.7% eyed. Capital goods were up sharply at 2.7% but ex defense or transportation core capital goods actually declined -0.2%

The pace of demand for durable goods in Q3 of 2009 is a vast improvement over double digit contraction in Q2 of this year. However, the rebound   remains less than impressive and suggests that the most bullish forecast of 4-5% GDP growth in the second half of this year are likely to be wildly optimistic.

Risk FX saw very little initial reaction to the news, but after having sold off for most of the Asian and European session on risk aversion flows, high beta  currencies may see small rebound as traders breathe a sigh  of relief that that Durable Goods data did not disappoint for the second month in a row. 

Nevertheless, today’s news  is hardly an green light for the resumption of the recovery rally as it suggests that the rebound in economic activity will be modest at best. Attention will now turn to the New Home Sales report due at 14:00 GMT with markets anticipating an uptick to 440K annual run rate from 429K the period prior.

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Comments (8)

spunky

October 28, 2009 at 09:04 AM ET

yes, pretty weak price action post; captured a few pips on running the stops at 1.4800 pre stock market open

Boris:
If GDP prints 2.75 will we see dollar bulls run , or will that mean lwr fed rates longer and eventually cause the euro to run back up and thru 1.500 , thoughts ?

regards
Brad

bschlossberg

October 28, 2009 at 09:47 AM ET

Goldman just cut its forecast to 2.7% from 3.0%

hsbc

October 28, 2009 at 10:32 AM ET

so wouldnt that mean that in medium term commodity currency would still see better support since fed isnt likely to hike anytime soon while aud int rates are at 3.5%?

bschlossberg

October 28, 2009 at 10:33 AM ET

Agreed. But more correction may be ahead

hsbc

October 28, 2009 at 10:38 AM ET

sigh. time to endure i guess. it happens every mth end

hsbc

October 28, 2009 at 10:46 AM ET

just out of curiosity ... would you establish a new short aud position here?

FXBulldog

October 28, 2009 at 01:09 PM ET

short aud? Absolutely!

hsbc

October 28, 2009 at 06:47 PM ET

so after having fallen from 93 to 90.20 u would still short aud? isnt ur risk reward a bit too high?

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About The Author

Boris Schlossberg began his Wall Street trading career more than 20 years ago at Drexel Burhnam Lambert. There, he traded nearly every type of financial product on the market in the U.S., from equities and options to stock index futures and foreign exchange. His innate ability to analyze market information and use it to trade has helped him become an industry-recognized, “go to” trading professional.

These days, whenever the markets move, many organizations turn to Schlossberg for his take on the situation. He is a weekly contributor to CNBC's Squawk Box and a regular commentator for Bloomberg radio and television. His daily currency research is widely quoted by Reuters, Dow Jones and Agence France Presse newswires and appears in numerous newspapers worldwide. Schlossberg has written for publications like SFO magazine, Active Trader and Technical Analysis of Stocks and Commodities. He is also the author of Technical Analysis of the Currency Market and the co-author of Millionaire Traders: How Everyday People Are Beating Wall Street at Its Own Game with Kathy Lien. He joined GFT in 2008.