Euro Push Higher Ahead of U.S. Durable Goods Orders

Despite an empty economic calendar, the Euro pushed higher against the greenback to reach a high of 1.39898 during the overnight session, and may continue to push higher over the U.S. session as market participants place their bets ahead of the durable goods orders report.

Talking Points

• Japanese Yen: Pares Yesterday’s Loss to Hold at 90.25
• Pound: Holds Tight Range
• Euro: Tests 1.40
• US Dollar: Durable Goods and Personal Spending on Tap

Euro Push Higher Ahead of U.S. Durable Goods Orders

Despite an empty economic calendar, the Euro pushed higher against the greenback to reach a high of 1.39898 during the overnight session, and may continue to push higher over the U.S. session as market participants place their bets ahead of the durable goods orders report. Nonetheless, as trading volume remains thin across the market, the likelihood for a major breakout is minimal as we head into the Christmas holiday.

The Euro pared gains against the Japanese yen to hit an intraday low of 125.98, and may face increased selling pressures over the remainder of the trading session as global equity prices fall lower. Meanwhile, the single currency for Europe continued to strengthen against the British pound, with the pair reaching a high of 0.9506 overnight, and may work its way back towards the record high of 0.9555 over the following week as the interest rate outlook for the Euro remains favorable against Cable.

The lack of event risk left the British pound in a tight range throughout the European session, and continued to weaken against the dollar as the GBPUSD slipped to a low of 1.4685. The pair looks to be forming a descending triangle formation following the sharp decline in October, which favors a bearish outlook for the pair, but seems to be testing the 1.4650 level for short-term support. The GBPUSD is likely to hold its current range over the remainder of the year as investors round-trip their open positions, and is likely to face increased selling pressures next month as market participants expect the Bank of England to lower the benchmark interest rate by 50bp to 1.50% at the January 8th policy meeting.

The U.S. durable good orders report has be a major market mover for the dollar during the past, and the greenback will be on defense as economists expect demands to fall another 3.0% in November, following the 6.2% drop in the previous month. In addition, personal spending, which is one of the two biggest drivers of growth, is anticipated to fall 0.7% for the same period, which continues to reflect a dour outlook for the world’s largest economy. As private-sector spending deteriorates throughout the second half of the year, expectations for additional easing by the Fed is likely to weigh on the reserve currency going forward, but as risk sentiment remains a dominant theme across the financial market, the dollar may continue to benefit from its safe haven status as the flight to quality continues.

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