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Obama Leaves the US Economy ‘Flourishing’ – EUR/USD & USD/JPY Break Support/Resistance

Posted Wednesday, November 23, 2016 by
Skerdian Meta • 2 min read

Great numbers from the US guys, at least that's the impression someone would get from a first glance at the US durable goods orders. The headlines are impressive, the goods orders jumped by 4.8% in October and the core durable goods increased by 1%.

These are such great numbers, particularly the main durable goods orders. Last month's numbers were revised a tad lower, but the slight revisions can't take the shine off this month's impressive numbers. Last month, the core durable orders, which leave out the defence and aircraft expenditure, dived by 1.3% (revised to -1.4%), so the trend of the last three months (Jun-Aug) was skewed by September's decline. But now, the core goods orders for October put this sector back on track.  

The uptrend is back intact

This month's core orders only grew by 0.4%, which is not bad by any means, but if we strip out the transportation as well then the jump is 1%. Now, the durable goods orders without defence, air, and transportation are mostly long-term business investment, hence durable goods. So, a 1% jump in a single month is quite a considerable expansion which means a better investor sentiment, otherwise businesses wouldn't have invested in machinery and other capital goods.

Besides that, this jump points to a brighter future for business activity and productivity. This is great news for the US economy knowing that productivity has lagged the economic recovery.

Another aspect of these figures is that this is the last durable goods report of the Obama era. This report shuns off whatever Trump might have said about Obma's politics, so I guess he's going to eat his hat now. He couldn't hope for a better business environment when he gets in charge of the country.

Both EUR/USD support levels have been broken 

Technically, looking at the forex charts on my trading platform, I can see that the latest round of US economic data has pushed some major forex pairs beyond some decent support/resistance levels. EUR/USD just broke below the 1.0570 support level, while USD/JPY rocketed more than 100 pips higher, breaking the 111 resistance level. This is another wave of USD buying that began after Trump's victory, so let's see how far it will take the price in USD pairs.  

We stayed on the sidelines during this forex event, but if you guys traded it I hope that you made a nice handful of pips from it. Trading the news can be tricky, so if you want some trading strategies for data releases then you can find them on our “Trading the news strategy” section. 

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