US markets were busy this evening as it was a mixed bag across the board as core durable good orders m/m came in stronger than expected at 0.5% (0.3% exp), this was certainly a boost on the previous month where we saw a weak result of -0.4%. Unemployment claims were also positive as they slipped to 260k (270k exp) - certainly a strong result for many. Consumer sentiment slipped, however to 91.3 and this was a bit of a surprise in the run up to Christmas, so many will be paying close attention here as the US consumer is a big driver for economic growth.
For me a lack of demand here by US consumers could certainly have a big impact in the short term as suppliers in America are unlikely to push up prices if demand is weak. Thus in turn we could still see weakness here in inflation and a dovish FED is unlikely to push rates any higher which is a concern for many out there. Personally, this is of no surprise to me, and the reality is that we should and could expect a rate rise to be pushed into 2016 given the US mixed data as of late.
AUD trader be careful, the most recent Capex data came out moments ago and it was extremely disappointing compared to what anyone expected as it came in at -9.2% q/q. For many the AUD has been one of those enigmas as of late as it has defied the odds to break out of the bearish trend and start to see some strong buying. However with the latest data it certainly underpins the weakness that is very much apparent in the Australian economy. The Reserve Bank of Australia (RBA) will be watching this very closely at present as capex has always been seen as an important part of the economy, especially with the mining sector contributing so much.
The AUDUSD has dipped on the charts and slipped lower and support at 0.7195 is likely to be the resting point for the time being, the weakness though bodes well for further slips. The RBA will also likely be looking to jawbone the currency a little more than usual I feel of the back of this result, as at present there is a strong incentive for them to look to take some sort of action given the very weak result we have just seen and so a push for support does look very much on the cards.
Lastly, it seems Japan is looking at further ways to stimulate the economy as there is talk now of a cut to the corporate tax rate. As a result there is an expectation that with higher profits from large companies Japanese workers will indeed get a pay rise, helping to boost the prospect of inflation in the long run. The USDJPY has barely budged on this news, but you can be sure that the Yen is likely to weaken further in the long run if Abe has anything to say about it.
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