Summary:

• US durable goods M/M +1.7% vs +1.0% exp
• USD rising across the board with only crypto escaping declines
• Gold falls to its lowest level since 24th August; USDJPY breaking higher

Durable goods orders made an impressive recovery for the month of August after falling sharply back in July by 6.8%. A month-on-month rise of 1.7% is clearly influenced in part by the disastrous prior reading but nonetheless it represents a pick-up and leaves the previous print looking more like an anomaly.  

 

Durable goods orders have rebounded after a sharp drop previously. Source: XTB Macrobond 

The core reading of 0.2% was inline with the consensus forecast with the prior reading revised higher by 0.1% to 0.6% from 0.5% previously. The release as been warmly greeted by USD bulls with the greenback now rising against all of its peers other than the cryptocurrencies.  

 The US dollar is rising against all its peers barring the cryptocurrencies. Source: xStation

The initial reaction can be seen in Gold, with the precious metal falling around half a percent in the minutes following the release. The market has now dropped to its lowest level in more than a month and is not far from the next possible support level at 1281. A break below 1281 would open up the chance for further weakness and if 1270 gives way then we would see a retest of the 1251 level int he coming sessions. 1291 is the first level to look for potential resistance should we get a recovery but as long as price remains below here then the shorts will have a chance to push price lower. 

 Gold has declined to its lowest level in a month following the release. Source: xStation

The USDJPY is benefiting today from both the rise in the greenback and the positive risk sentiment seen in equities. The market has now broken above a falling trendline going back to the year-to-date high at 118.69. Given the sharp rally following the US election prior to this peak, there is a possible long term bull flag in play with today’s break possibly providing the catalyst for the next leg higher.

 USDJPY has popped to its highest level since mid-July following the release and is back above the 113 handle. A long term bull flag may have been broken out of to the upside. Source: xStation