The Euro to US Dollar (EUR/USD) weakened to a 1-month low and was on course to slide back to an 11-year low as the ‘Greenback’ was buoyed by the release of strong durable goods data.
The Euro to US Dollar (EUR/USD) exchange rate fell to a session low of 1.123
Data released by the Washington based Commerce Department showed that durable goods orders rallied strongly in January.
The positive data increased optimism that US factories are set to increase their production after a lull for the winter. The report showed that orders for goods such as cars, refrigerators and planes rose by a seasonally adjusted 2.8%. Economists had been forecasting for an increase of 1.6%.
Excluding the volatile transportation sector, orders climbed by 0.3%.
‘With these kinds of broad-based job gains, it seems like a lot of sectors are contributing and that’s generally a good sign for all sorts of spending, including cap-ex. We’d be doing better if global growth was stronger,’ said Joseph LaVorgna, chief US economist at Deutsche Bank Securities Inc.
Other data out of the US was rather mixed as the Department of Labour showed that the number of Americans filing for initial jobless benefits in the week ending February 21 increased by 31,000 to 313,000 from the previous week’s revised total of 282,000.
Consumer prices were also shown to have fallen by 0.7% last month compared to expectations for a decline of 0.6%. Core consumer prices meanwhile, increased by 0.2%. The figure beat expectations for a rise of 0.1%.
Bullard Comments Supports ‘Greenback’
The US Dollar received further support after St. Louis Federal Reserve President James Bullard said that the Federal Reserve should raise interest rates in the summer and that the nation’s unemployment rate should fall to 5% in the second half of the year.
‘There’s too much focus about the first move. It is really the path of rates that matter. I would be for starting a little bit earlier on the normalisation process. It is not tightening; it is still going to be a very accommodative policy even if we move off zero. These labour markets are improving so rapidly, if you haven’t come even come off zero and the unemployment rate has come down below 5%, that seems a little extreme to me,’ Bullard said in an interview with CNBC.
Following the comments the US Dollar surged by almost half a cent against the Euro.
German inflation and US GDP data will be in focus on Friday.
