The economic reports released in the Thursday session were initially dollar positive, with the greenback bouncing to 1.57 against the euro and rising to 104 versus the yen. Although the headline reading for durable goods orders was slightly weaker than expected at -0.3%, versus calls for a flat reading, it still marked an improvement from the -1.1% drop in February. The excluding transports durable goods orders posted a sharp improvement from the prior month, increasing by 1.5% in March, compared with a 2.4% decline. Weekly jobless claims also improved, falling to 342k down from 372k a week earlier. However, March new home sales posted a larger than expected drop, plunging by 8.5% to 526k units, versus 590k units in February.
The housing market continues to weigh on the economy Fed funds futures are currently pricing in an 82% probability for a 25-basis point rate cut to 2.00% when the FOMC meets next week. We expect the Fed to ease policy next week but possibly signal a pause in any further moves.
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