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USD/JPY Falls Back Below ¥103 as Weak Durable Goods Add Concern

USD/JPY Falls Back Below ¥103 as Weak Durable Goods Add Concern

2014-01-28 14:15:00
Christopher Vecchio, CFA, Senior Strategist
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Talking Points:

- December Durable Goods miss expectations badly.

- US Dollar tumbles as US yields fall.

- British Pound, Euro, and Japanese Yen rally on data – not Aussie, though.

The weak December NFP report stirred concerns that the US economy was slowing at the turn of the year. However, critics of the data (and similarly those vocal about the Federal Reserve tapering its QE3 stimulus program) have often pointed to more persistently inclement weather during the month as a reason why the economy slow. Regardless, the numbers aren’t pretty and the US Dollar is suffering as a result.

Here’s the data hurting the US Dollar:

- Durable Goods Orders (DEC): -4.3% versus +1.8% expected, from +2.6% (m/m).

- Durables ex Trans (DEC): -1.6% versus +0.5% expected, from +0.1% (m/m).

USDJPY_Falls_Back_Below_103_as_Weak_Durable_Goods_Add_Concern_body_Chart_1.png, USD/JPY Falls Back Below ¥103 as Weak Durable Goods Add Concern

If the decision were binary, market participants are putting this data on the side of no additional QE3 tapering, at least at least in January based on the ‘gut’ reaction. The US Dollar has fallen against the European currencies and safe haven currences in the wake of the report, though signs of weaker consumption data from the world’s largest economy spurred more hesistance in the commodity currency complex.

USDJPY 1-minute Chart: January 28, 2014 Intraday

USDJPY_Falls_Back_Below_103_as_Weak_Durable_Goods_Add_Concern_body_x0000_i1028.png, USD/JPY Falls Back Below ¥103 as Weak Durable Goods Add Concern

Charts Created using Marketscopeprepared by Christopher Vecchio

The weakening in underlying yields was evident given the soft price action of various US Dollar pairs after the report. The USDJPY, for one, remained lower, trading from ¥103.10 to as low as 102.62, before settling back at 104.73.

EURUSD 1-minute Chart: January 28, 2014 Intraday

USDJPY_Falls_Back_Below_103_as_Weak_Durable_Goods_Add_Concern_body_x0000_i1029.png, USD/JPY Falls Back Below ¥103 as Weak Durable Goods Add Concern

Charts Created using Marketscopeprepared by Christopher Vecchio

Likewise, the EURUSD benefited from the weak US Dollar. The pair traded up from a low of $1.3642 to as high as 1.3675, before settling back at 1.3671 at the time this report was written.

--- Written by Christopher Vecchio, Currency Analyst

To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com

Follow him on Twitter at @CVecchioFX

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