US Dollar Recovers on Upbeat Durable Goods Orders

The US dollar showed some degree of recovery following the emergence of a positive batch of US data that highlighted an improvement in orders for durable goods in the United States, which came one day after a negative batch that indicated a deterioration in general economic activity, which raised new speculation about… Rate cut by the Federal Reserve.

The improvement in durable goods orders readings led to a rise in the dollar index, which measures the performance of the US currency against a basket of major currencies, to 105.90 points compared to the last daily close, which recorded 105.68 points.

The index fell to its lowest level on the trading day on Wednesday, at 105.59 points, compared to the highest level, which recorded 105.95 points.

Last March, the reading of this index rose to 2.6% compared to the previous reading, which recorded a smaller increase of about 0.7%, which exceeded market expectations for the same period.

The US dollar index fell on Tuesday after reports of a slowdown in US economic activity and varying inflation indicators this April. The Federal Reserve is closely monitoring these developments to determine the need for further adjustments in monetary policy in order to deal with rising inflation.

Positive data

The latest batch of US data indicated a noticeable slowdown in economic activity in the United States, with the Standard & Poor’s Composite Purchasing Managers’ Index (Global Edition) falling to 50.9 in April from 52.1 in March, indicating a lower-than-expected rise. Markets and the previous reading, recording the lowest levels in four months.

In addition, the labor market showed its first contraction since June 2020, especially in the service sector, which may indicate a slowdown in employment trends at the current stage. Despite these indicators, inflation rates declined slightly, although input prices remained high.

The increase in orders for durable goods in the United States means that the American consumer is reassured about the current and future economic conditions, which prompts him to purchase these high-cost goods.

The markets considered this confidence to be one of the most important factors that the Fed may rely on to slow down a little before cutting interest rates, which indicates the possibility that the markets will not witness a rate cut next June, which is positive development for the US dollar.