The US Dollar started 2021 on a bearish foot, after a tough year. Coronavirus turned central banks and governments around the globe really dovish as the uncertainty remained high, with the FED and the US government leading the way in spending cash to support the economy.

As a result, the USD remained bearish throughout 2020, but at the beginning of 2021 the situation started to change. EUR/USD started to reverse lower and throughout 2021 the trend has been bearish and the USD index the DXY shows that. The durable good orders below posted a big jump in November, so all sectors of the economy are expanding at an enormous speed.

US Durable Goods for November 2021

• US November durable goods orders (advanced) 2.5% vs 1.6% estimate
• October orders were -0.4% (revised from -0.5%)
• Durable goods increased by 2.5% which was greater than expected. The durable goods have been up six the last seven months. October was revised to 0.1%
• Durables ex transportation 0.8% versus 0.3% last month
• Prior ex transportation was 0.5% revised to 0.3%
• Capital goods orders nondefense, ex-air -0.1% versus 0.9% revised
• Prior capital goods orders nondefense, ex-air +0.7% was revised to 0.9%
• Durable goods shipments increase at 0.7% versus a 1.7% increase in October
• Durable goods ex defense came in at 2.0% versus 1.3% revised in October (was revised from 0.8%).
• Unfilled orders have been up for the 10 consecutive months and increased by 0.7% versus 0.3% in October.
• Inventories of manufactured durable goods have been up for the 10th consecutive month after a 0.6% increase in November. This came after a 0.7% rise in October. Machinery is up for the 13th consecutive month

Overall the headline numbers were better than expectations and the revisions were also positive. However, the data will be revised in the factory orders report on January 6. That in turn can be revised at the next durable goods report scheduled for release on January 27.

The US economy has been running pretty hot, with the rest of the world trailing it. But, inflation has been the main driver of the stronger USD as it keeps surging to levels we haven’t seen in decades. IN November CPI (consumer price index) inflation jumped to 6.8% and will probably increase further in December. The FED is panicking and tightening the monetary policy, so the US is quite bullish right now and will continue heading up toward the beginning of 2021.

US CPI Inflation During 2021