The US dollar weakened against a basket of currencies Thursday, as durable goods orders declined sharply in August, fueling concern about a slowdown in the domestic economy.
Manufactured goods meant to last three years or more fell 2% in August following two consecutive monthly increases, the Department of Commerce reported Thursday.
Core durable goods orders, which are seen as a proxy for business investment, fell 0.2%, official data showed. Shipments of so-called core capital goods, which are used to calculate quarter GDP, also slipped 0.2%, official data showed.
Thursday’s numbers add to the growing body of evidence showing a broad slowdown in the US economy in the third quarter. According to analysts, US GDP growth likely slowed to between 1.5% and 2.5% annually in the July to September period, down from the previous quarter’s 3.7% growth pace.
Separately, weekly jobless claims continued to point to a solid labour market recovery. The number of Americans filing first-time unemployment benefits rose slightly to 267,000 last week, but remained well below the 300,000-mark that is generally associated with a firming labour market. The less volatile four-week average declined to 271,750.
The US unemployment rate fell to 5.1% in August, a new seven-year low.
The US dollar index declined for a second consecutive day on Thursday, falling 0.3% to 95.74. Most of the dollar’s losses came against the euro and yen.
The dollar declined against the euro for a second straight day, as the EUR/USD exchange rate surged 0.6% to 1.1259. A clean break above this level would lead to a test of the September 21 high of 1.1330. On the downside, initial support is likely found at 1.1163, the daily low.
The USD/JPY declined 0.5% to 119.57 after Japanese Prime Minister Shinzo Abe announced a “new stage” of Abenomics, focusing on a strong economy, childcare and social welfare. The USD/JPY faces immediate support at 119.22 and resistance at 120.68.
The dollar traded inversely with gold, which rallied for a second consecutive day. Gold for December delivery, the most actively traded contract, rose $8.80 or 0.8% to $1,140.30 per troy ounce.
In other commodities, oil prices continued to slide after government data on Wednesday showed a bigger than expected rise in US gasoline inventories. West Texas Intermediate crude fell 31 cents to $44.17 a barrel. Brent crude, the international price gauge, declined 8 cents to $47.67 a barrel.
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.