Yen Surges After G7 Clarifies Earlier Statement; USD/JPY Tanks
THE TAKEAWAY: USD Durable Goods Orders (JAN) > -5.2% versus -4.8% expected, from +3.7% (revised from +4.6%) (m/m); Durables ex Transportation (JAN) > +1.9% versus +0.2% expected, from +1.0% (revised from +1.3%) (m/m) > USDJPY BEARISH
Despite higher taxes on consumers resulting from the US fiscal cliff deal, it appears that consumption figures remain solid amid sturdy business investment. The headline Durable Goods Orders print missed the projected contraction, to -5.2% m/m, but the ‘core’ reading, stripped of transportation, cruised by forecasts, at +1.9% m/m.
The strong ex-transportation figure suggests that consumers and businesses remain strong in the face of an uncertain tax future, with the next round of automatic budget cuts (the sequester) set to hit this Friday, March 1. The headline figure actually reflects the sequester: defense bookings slumped to their lowest level in a decade, according to Bloomberg News.
USDJPY 1-minute Chart: February 27, 2013
Charts Created using Marketscope – Prepared by Christopher Vecchio
Following the release, the USDJPY fell from 91.64 to as low as 91.34, before settling at 91.42. Sideways price action was observed across the rest of the majors, with exception to the GBPUSD, which rallied approximately for +15-pips after the release.
--- Written by Christopher Vecchio, Currency Analyst
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