Solid Trade data and Factory orders helps USD

EURUSD, H4                 

US trade deficit narrowed 9.6% to -$43.6 bln in February after widening 8.8% to -$48.2 bln (revised from -$48.5 bln) in January. Imports dropped 1.8% after January’s 2.3% jump, breaking a string of 4 straight monthly gains. Exports were up 0.2% following a prior 0.8% increase (revised from 0.6%). The “real” goods trade deficit was -$59.7 bln versus -$65.1 bln (revised from -$65.3 bln) with goods exports inching up 0.3% while real goods imports fell 2.6%. The trade deficit with Canada narrowed to -$2.1 bln versus January’s -$3.4 bln (revised from -$3.6 bln), and was -$23.0 bln with China compared to the prior -$31.3 bln. The data may provide some boost to Q1 GDP and a very interesting backdrop for the Trump/Xi Jinping meeting this week.

US factory orders rose 1.0% in February, as forecast, after jumping 1.5% in January (revised from 1.2%) and 1.3% in December. Orders have increased in seven of the last eight months, having fallen 2.3% in November. Durable goods orders were up 1.8%. Transportation remains a major support and rose 4.4% in February following the 7.0% January rebound (revised from 6.2%). Excluding transportation, orders are up 0.4% versus 0.5% previously (revised from 0.3%). But, nondefense capital goods orders excluding aircraft, a proxy for capital spending, dipped 0.1% in February versus a prior 0.2% increase (revised from -0.1%), and have increased in six of the last eight months. Factory shipments edged up 0.3% after the prior 0.3% gain (revised from 0.2%). Nondefense capital goods shipments excluding aircraft climbed 1.0% in February after the prior 0.4% slump. Inventories increased 0.2% versus the 0.3% gain previously (revised from 0.2%). The inventory-shipment ratio was steady at a low 1.31 for a third straight month.

Both sets of data helped the greenback as EURUSD touched two week lows at 1.0634. We remain short on the Daily chart from our entry at 1.0764 (March 29) to our Target 2 at 1.0605.

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Stuart Cowell

Senior Market Analyst


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