THE TAKEAWAY: USD Durable Goods Orders (JUN) > +4.2% versus +1.4% expected, from +5.2% (revised higher from +3.6%) (m/m) > USD Initial Jobless Claims (JUL 20) > 343K versus 340K expected, from 336K (revised higher from 334K) > USDJPY BEARISH
The US Dollar, despite initially rallying on this morning’s batch of pre-US cash equity open data, has taken a hit across the board in the wake of the release of two critical reports. Considering that the data suggest that the US economy is improving (and follow a strong June New Home Sales report yesterday), the US Dollar selloff that has since ensued is that much more quizzical.
Nevertheless, it appears that the meager erosion in the weekly labor market report is having a greater influence on price action than the blowout headline consumption reading. Though, it should be noted that the orders figure stripped of auto sales came in flat against a +0.5% expected increase, essentially negating the positive upside on the headline print.
Initial Jobless Claims for the week ended July 20 ticked higher to 343K, and in light of the prior revision, overall the report came in by 5K weaker than anticipated. Still, with the headline print below the four-week (monthly) trailing average of 345.3K, the US labor market is maintaining its progress in the neighborhood of +175K to +195K per month.
USDJPY 1-minute Chart: July 25, 2013
Charts Created using Marketscope – prepared by Christopher Vecchio
Following the releases, the USDJPY initially jumped from ¥99.80 to as high as 99.98, but within one-minute, the pair had retraced all of its gains and began falling. Within 20-minutes, the pair had fallen to fresh session lows at 99.53. At the time this report was written, the pair had traded back to 99.71.
— Written by Christopher Vecchio, Currency Analyst