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US factory orders fall more than expected; USD losing ground

Summary:

  • US factory orders for April M/M: -0.8% vs 0.4% exp
  • 2nd worst reading in the past 9 months
  • USD losing ground against majority of its peers; AUDUSD breaking higher

It’s a quiet day on the economic data front with some 2nd tier data from the US the only real releases of note from North America. Both the latest factory orders figures and the most recent durable goods orders fell fairly sharply and they will have done little for the US dollar which was already dropping on the day.

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 The USD has made a soft start to the new week with the buck falling lower against nearly all of its peers. Source: xStation

The factory orders M/M for April showed a decline of 0.8% compared to an expected -0.4% print, and even though the prior reading was revised higher by 0.1% to 1.7% it represents a pretty poor reading. In fact it is the 2nd worst since last September’s release, and the metric of industrial activity is now towards the lower reaches of its recent range. 

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 US factory orders fell more than expected and the latest reading is towards the bottom of the recent range. Source: Bloomberg

At the same time as the factory data, the durable goods orders was released and even though they were revised marginally higher (-1.6% M/M vs -1.7% M/M preliminary) it still represents a notable decline on the +2.6% prior. The longer term view of this indicator shows that the current levels remain pretty high compared to the past 5 years or so, but the recent weakness may be a little cause for concern. 

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 Durable goods orders remain high compared to recent years, but the latest data does potentially suggest a little weakness. Source: XTB Macrobond

 As you can gather from the above USD heatmap, the AUD is enjoying a strong day of gains against the greenback, with the pair reaching its highest level since mid-April. We earlier noted that the Aussie was rising on the back of some solid data from down under with the latest retail sales numbers particularly pleasing. The pair has made a clean break above the 0.7590 level that had previously acted as resistance and this may now be seen as possible support if price pulls back. The market has swiftly jumped to test another possible swing level around 0.7655 which previously provided support - and now may flip to offer resistance. Further gains up through 0.7655 would pave the way for further upside and would see more of the losses seen since the January high recouped.   

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 The AUDUSD is enjoying a strong day of gains and has potentially broken out after a few weeks of consolidation. Source: xStation

 

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