Greenback is heading higher today, thanks in large part to the latest durable goods orders. The improvements in the US economy indicate that the Federal Reserve’s decision to begin tapering bond purchases in the relatively near future was the right call.
Ben Bernanke has long said that improving economic data — especially in the realm of jobs — would dictate when the Federal Reserve begins reducing its quantitative easing efforts. The latest announcement that tapering would start relatively soon caused some consternation, but it also boosted the US dollar.
Today’s durable goods orders data indicates that the US economic recovery is still moving forward, and that the call was likely the right one. Durable goods orders increased by 3.6 per cent in April, according to the Commerce Department. This beat expectations of 3.0 per cent. The news has boosted the US stock market, sa well as helping the greenback.
The improving economic news provides a contrast between the US dollar and the euro, since it appears that the greenback is moving out of easing mode, while there is still the chance of easing by the ECB.
At 15:41 GMT EUR/USD is down to 1.3086 from the open at 1.3120. GBP/USD is down to 1.5417 from the open at 1.5433. USD/JPY is up to 97.8150 from the open at 97.7315.
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US Dollar Gains on Durable Goods Orders
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