Mid-Day Report: Dollar Mixed after Poor Durables, New Home Sales and Jobless Claims

Market Overview | Written by ActionForex.com | Jan 29 09 15:28 GMT |

Dollar is rather mixed after another round of poor US data are released today. Though, yen is mildly higher as US stocks opens lower. Durable goods orders fell the third consecutive months by -2.6% in Dec, worse than expectation of -1.8%. Ex auto orders also dropped much more than expected by -3.6% while ex-defense orders dropped by -4.9%. More surprising was the downward revisions in Nov's numbers with headline orders down from -1.5% to -3.7%, ex-auto orders down from +0.6% to -1.7% and ex-defense orders down from -1.5% to -3.9%. The report raises some concern that tomorrow's Q4 GDP report will show deeper contraction that expected -5.4% qoq. On the other hand, new home sales dived sharply by -14.7% in Dec to another record low of 0.33m annualized rate. Initial jobless claims remains elevated at 588k while continuing claims jumped further to all time high of 4.776m. From Europe, ECB Trichet said that the central bank is not excluding the possibility of cutting rates to below 2%, nor does it rule out the use of "non-standard action". Germany's unemployment rose by 56 K in January, almost doubled market expectation of 30K and revised 33K in December. Unemployment rate climbed highly to 7.8% from 7.7% in the previous month as business activities slowed down and companies cut positions. In the coming few months, we will likely see further rise in unemployment rate. Eurozone's M3 money supply growth slowed to 7.3% yoy, the lowest level in 5 years, in December following a 7.7% gain in the previous month. Though less severe than market anticipation, business climate in the Eurozone plunged to -3.16 in January compared with revised -3.09 in December while economic sentiment fell to 68.9 from revised 70.4. Consumer confidence came in inline with consensus at -31, from -30 in December. UK Nationwide House price drop further by -16.6% yoy in Jan. In Japan, retail sales in December plunged -2% mom in December, more than market expectation of -0.8% drop and -0.1% drop November. On annual basis, it fell -.7%, the biggest decline since 2005 as consumers reduced spending on unemployment concerns. New Zealand's trade deficit came in at NZD -347M in December, worse than consensus of NZD -100M, after a revised deficit of NZD -588M with exports rose 4.8% from a year ago to NZD 3.85B and import dropped for the second month to NZD 4.2B. EUR/USD Mid-Day Outlook Daily Pivots: (S1) 1.3069; (P) 1.3198; (R1) 1.3294; More Despite the brief recovery, there is no change in EUR/USD's outlook. Recovery from 1.2764 has likely completed at 1.3329, below mentioned 1.3385 resistance. Intraday bias is still mildly on the downside for 1.2764 first. Break will confirm decline from 1.4719 has resumed for a retest of 1.2329 low. While some consolidation might still be seen above 1.2764, we'd still expect upside to be limited by 1.3385 resistance. However, break of 1.3385 will indicate that fall from 1.4719 has completed. This will also argue that such decline is merely part of the consolidation that started at 1.2329, which is indeed still in progress. In such case, stronger rebound could be seen, targeting 1.4719 high. In the bigger picture, a medium term bottom in place at 1.2329 and fall from 1.6038 should have completed. Whether such fall is impulsive or corrective in nature is debatable. But after all, in either case, as long as 1.4867 resistance holds, such decline is still in favor to resume and should target 1.1639 medium term support next. Though, some larger scale consolidation could be seen first. However, above 1.4867 will dampen the bearish view and argue that stronger rally would be seen to retest 1.6038 record high.