The US dollar continued to edge lower on Wednesday, as durable goods orders declined unexpectedly in February, adding further evidence the economy was slowing amid global volatility and weak energy prices.
The US dollar index, a weighted average of the greenback against a basket of currencies that includes the euro, yen, pound, franc, loonie and krona, declined 0.3 percent to 96.93. The index touched an intraday low of 96.54 before rebounding in the afternoon session.
The greenback lost ground against the euro, as the EUR/USD made another push at 1.10. The pair advanced 0.5 percent to 1.0963.
The British pound enjoyed soft gains against the dollar, as the GBP/USD advanced 0.2 percent to 1.4871. The pair had previously touched a high of 1.4955.
The dollar came under pressure after the Ifo Institute said German business confidence rose for a fifth consecutive month in March. The business climate index climbed to 107.9 in March from 106.8. That was the highest reading since July of last year
In US data, durable goods orders declined sharply in February, with a key gauge of business spending also declining. Orders for manufactured goods meant to last three years or more fell 1.4 percent in February following a downwardly revised gain of 2 percent the previous month, the Department of Commerce said on Wednesday. A median estimate of economists called for a gain of 0.4 percent.
Orders for non-military capital goods excluding aircraft, a guidepost of business spending, also fell 1.4 percent, official data showed. That was the sixth consecutive month the business spending component of durable goods orders had dropped.
The US manufacturing sector hit a rough spot in the early part the year, although the latest manufacturing PMI suggests factory activity was rebounding in March. Markit’s gauge of US manufacturing activity rose in March to its highest level since September 2014.
Markit Economics will report on services PMI on Thursday. US service activity is forecast to grow at a steady rate in March, building off February’s strong performance.
On Friday the Department of Commerce will release a final estimate of fourth quarter GDP growth. The US economy slowed to an annualized rate of 2.2 percent in the fourth quarter, the revised estimates showed last month. Government economists are expected to revise their estimate to 2.4 percent annually on Friday. GDP output surged 5 percent annually in the third quarter, the strongest growth rate in 11 years.
Based out of Toronto, Canada, Husni Sam Borji is senior macroeconomics analysts who contributes regularly to TradersDNA, where he examines the global financial markets. Husni Sam has authored dozens of government reports and industry whitepapers, as well as thousands of financial articles. Husni Sam holds a BA from the University of Windsor and a Master’s degree in Economic Public Policy from McMaster University.
His expertise includes macroeconomics, fundamental analysis, industry research and global political economy.