Equities Take A Beating On Bad Durable Goods March 26, 2015
US Data Has WTF Moment, Stocks Tumble
There once was a time when we could just about guarantee that Durable Goods Orders would somewhat mirror any better housing data from the US. I know I have said this before and was what I expected yesterday with the much better New Home Sales on Tuesday. However with the divergence in these two data releases shows there is definitely something wrong with this picture. Think of it this way. When people buy new homes in a good economy the first thing they do is fill that home with new appliances from refrigerators to washing machines etc. This is why up until the financial crisis the reliability of the correlation between these two data releases was significantly tighter. Therefor when this falls apart as it has over the last several years we really should be asking our self why.
The way I see it is there are two possibilities. The lesser of the two evils (most likely the wrong one) here is that regular people are buying houses but cant afford to get the new appliances so they either bring their old ones with putting off the purchases until a later date. The other more likely scenario considering the wealth gap growing wider by the minute, as the rich get richer on the backs of the middle class and poor, is that the wealthy folks are buying up property as a safe asset to hold having no intention to live there or buy appliances. Potentially even renting these houses in which there is no need for appliances since renters often have them. Especially in the case of a renter being one of the millions who lost their homes as the US government bailed out the banks.
In short this data and more than likely future releases will show just how FUBAR the US economy is. Fun times ahead.
EUR/USD Holding Range
With the EUR/USD range bound along with the GBP/USD and EUR/JPY todays analysis gets really simple. The safer entries will be at the extremes again on all pairs. The strongest level for a short is at the psych 1.1000 but I will be watching for the potential stop run above Tuesdays highs as well. The best potential for a long will be 100 pips away at 1.0900.
GBP/USD Holds Bottom End Of Its Range
The GBP/USD is in a slightly different situation with the daily price action staying in the lower end of the three day range. The 1.4926 level will be the first place I look to short being cautious of them running stops above yesterdays highs. Otherwise a long from 1.4833 will be where I will consider a long set up to hold the range yet again.
The EUR/JPY levels havent changed with 131.28 or just above being the best short and 130.47 the safer long although they could also hold the range from yesterdays lows just above.
Forex News Today
The calendar starts off with German GFK Consumer Climate expected slightly better which should be close if the IFO data yesterday is any clue. A bit later is French GDP that will only get them going on a large miss.
The UK has Retail Sales figures just after a FOMC Member Bullard Speech starting. Expected to slightly improve on the high impact monthly tally getting above the zero mark. Any print below zero should be negative while even a small disappointment may be overlooked as long as its above zero.
The US has Thursday Unemployment Claims that will likely be a non event unless it pops well above 300K.
Asian session traders have Japanese Inflation Data to watch out for tomorrow but I have my doubts it will cause them to start pushing the Yen around since they have already acknowledged that the massive QE isnt doing what they hoped regarding reaching target inflation.