US Data Disappoints – USD Unfazed

The May US durables data were almost as disappointing as the April figures. US durable orders declined another 1.3% in May after falling a revised -2.8% in April (was -2.1%). Weakness was in transportation orders, which dropped 4.6% following the prior 7.6% plunge (revised from -5.9%). Much of the rest of the report was better than expected. Excluding transportation, orders rebounded 0.3% from -0.1% (revised from unchanged). On a positive note, non-defense capital goods orders excluding aircraft edged up 0.4% from -1.0% (revised from -0.9%). Shipments increased 0.4% from -1.6%. Non-defense capital goods shipments ex-aircraft rose 0.7% from a 0.4% gain (revised form unchanged). Inventories increased 0.5% from 0.4%. The inventory-shipment ratio was steady at 1.67.

US Advance goods trade deficit widened to -$74.5 bln in May versus -$70.9 bln (revised from -$72.1 bln). Goods imports increased 3.7% to $214.7 bln, with exports up 3.0% to $140.2 bln. The increases were likely a function of the increase in tariffs on China which went into effect on June 1. May Advance retail inventories increased 0.4% after a 0.6% increase (revised from 0.5%). Wholesale inventories were up 0.4% following the April 0.9% gain (revised form 0.8%).

Overall the data is likely to have little impact as attention is on geopolitics and the upcoming G20 and Trump-Xi meeting. The USD was little changed following the weaker durable orders and trade balance data, with the USD holding gains for the day with EURUSD down at 1.1315 and USDJPY capped by R1 Resistance at 107.75 and a 100 pip move from yesterdays 5 month low.

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Stuart Cowell

Head Market Analyst

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