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    FX News Today

    US Durable Goods – Big February declines:  Also downward January revisions across all the major orders, shipments, equipment and inventory figures that reflected weakness both with and without transportation and defense orders declines. We lowered our Q1 GDP growth forecast to 1.4% from 2.0% after a likely Q4 boost to 1.2% from 1.0%, given what we now assume will be a 3% Q1 contraction rate for equipment spending, versus our prior 4% projected growth clip. Inventories are poised to subtract $22 bln from GDP in Q1 to leave a $57 bln accumulation rate, after a $6.3 (was $3.8) bln subtraction in Q4. We expect a 0.5% February factory inventory drop with a 0.2% total business inventory decline, given today’s 0.3% factory durable inventory decrease. We assume a 2.2% February factory orders drop with a 1.2% factory shipments decline, given an assumed 1.5% price-led nondurable shipments and orders drop.

    US Markit flash services PMI improved: There was a 1.3 points to 51.0 in March after diving 3.5 points to 49.7 in February. The bounce puts the index back into expansionary territory after the surprise February decline to the lowest reading since October 2013. However, the new business index slid to 50.8 from 52.1, and is the lowest reading on record. The March composite index also rose 1.1 points to 51.1 from February’s 50.0 (which was also the lowest since October 2013). New orders declined to 51.2 from 52.2, and is a record low. Though the headline gains are good news, some of the internals inject a question mark into the growth outlook.

    US Initial Unemployment claims rise to 265k: This was for the third week of March followed big downward claims revisions in both January and February attributable to annual revisions that left a lean 259k (was 265k) BLS survey week figure and a 253k (was 259k) cycle-low at the start of the month. The revised data still show elevated holiday levels, but less of an auto-retooling hit in July. Claims are averaging just 260k in March, versus prior averages of 261k (was 269k) in February, 282k (was 284k) in January and 277k in December. The 259k BLS survey week reading sits close to the 260k (was 262k) February BLS figure and below prior BLS readings of 291k (was 294k) in January, and 275k (was 272k) in both November and December. We expect a 190k March nonfarm payroll rise that undershoots the 242k February pop but beats the 172k January increase, with upside risk from a tightness in claims, a firming in producer sentiment after weak winter readings, and an encouraging ADP path through a 214k February rise.


    Main Macro Events Today

    • US GDP 

    The third release on Q4 GDP is out today and should reveal a revised headline of 1.2% (median 1.0%) from 1.0% in the second release, 0.7% in the first release and 2.0% in Q3 of last year. We expect $6 bln in net upward revisions in the release with consumption revised up by $5 bln, net exports up by $4 bln and construction revised up by $2 bln but with offsetting revisions of -$1 bln for equipment and -$2 bln for intellectual property.


    Please note that times displayed based on local time zone and are from time of writing this report.

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    Stuart Cowell

    Senior Currency Analyst


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    Please note that times displayed based on local time zone and are from time of writing this report.

    Click here to access the full HotForex Economic calendar.

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