US dollar rises, but still awaits fresh catalysts

The February orders for durable goods performed better than anticipated. Data on housing revealed some decline. This week’s focus will be on the release of PCE figures for February on Friday. Tuesday’s trading saw gains in the US dollar Index, slightly higher against its rival currencies, circling around 104.20. The US dollar is steady following reports on the housing and durable goods markets while investors wait for new catalysts to start making bets on the next Fed decisions.

The US economy is on a delicate path with inflation-linked concerns, and economic activity showing some weakness. Jerome Powell confirmed the central bank’s persistence in not overreacting to hot inflation figures from the start of the year. Meanwhile, the Fed didn’t change its interest rate projections from 2024. The start of quantitative easing is still expected in June, but incoming data will continue dictating the timing.

S&P/Case-Shiller Home Price fell by 6.6% on a yearly basis in January, slightly lower than expected. The House Price Index reported by the Federal Housing Finance Agency (FHFA) in January saw a slight dip of 0.1% for the same month.

Durable Goods Orders rose 1.4% MoM in February, according to data from the US Census Bureau. This figure beat the 1.1% consensus and is a notable improvement after the prior 6.9% decline.

While the core measure is predicted to have increased by 2.8% YoY, the headline Personal Consumption Expenditures (PCE) is likely to have increased by 2.5% YoY. The short-term direction of the USD will depend on the results of the Fed’s favoured inflation gauge.