US Durable Goods Orders in Focus Amid High Inflation, USD Strength
A key measure of industrial productivity in the US is the main trading news release event today. US Durable Goods Orders results for March are in focus amid high inflation rates and USD strength.
Durable goods are items that last three months or more, like computer equipment or vehicles. The survey is an important indicator of the health of the US economy and includes the machinery, technology, manufacturing and transportation sectors.
The month-on-month figures are expected to have fallen from 2.2 percent in February to 1 percent in March, weighed down by higher prices in the commodities and raw materials supply chains.
At the time of writing, market sentiment is wary of inflation and sensitive to any signs of a recession in the US. If industrial activity slows down and durable goods orders results are lower-than-expected, traders may react by selling off the USD and taking shelter in another safe haven – gold. If the figures are better than expected, the USD could gain support for its current strength, relieving short-term concerns over a recession in the US.
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There are arguments on both sides for durable goods orders strengths and weaknesses. Durable goods orders in March may have been negatively affected by high crude oil prices making goods more expensive. Commodity supply chains remain under pressure from supply-side shortage fears triggered by the ongoing conflict in Ukraine which is now entering the third month.
Since the US employment sector is resilient, it’s possible that this strength could feed into investment sentiment towards durable goods, even if they are more expensive due to inflation.
Global crude oil spot prices have started seeing downward pressure from COVID-19 lockdowns in China, based on the expectations that demand for fuel plummets as the manufacturing sector slows or stops for weeks, even months, at a time. The lockdowns in China would not have affected March’s durable goods orders since they began this month, but it is a factor to keep in mind for April’s results.
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