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US Durable Goods OrdersImprove in June; USDX Edges Higher

In June, US durable goods orders rose 0.7% on the month, which is a sharp rebound from the -0.9% reading May, and beat forecast of around a 0.4% reading. The core reading, which excludes transportation items, also rebounded to 0.8% after a flat 0.0% reading in May. The forecast was around 0.6%.

The data surprised estimates, and is a good sign of improving domestic demand. Durable goods are those that last more than 3 years. They usually require business investment, or substantial disposable income for consumers. Think what the average family has to save to buy a new TV or new washing machine, or what the business outlook has to be for a company ordering more computers.

The strong report has not translated much to a strong USD, but it did nudge it along an already bullish trend, as you can see in the US Dollar Index chart.

USDX 1H Chart 7/25

The US Dollar index is now pushing above 81.00 and poised to challenge the 2014 high around 81.38 up to the Nov 2013 high at 81.48. Since the USDX has been bearish-sideways since 2013, we should respect these highs especially with the daily RSI pushing into overbought territory (above 70).

USDX Daily Chart 7/25