US Dollar Weakens After Crash in Durable Goods Orders

The US dollar is weakening against its major currency competitors to finish the trading week. While the greenback is on track for a weekly boost, the buck fell on the latest worse-than-expected economic data. The dollar’s descent on Friday could also be driven by inflation fears as the federal government approved another massive spending bill.

According to the US Census Bureau, new orders for manufactured durable goods cratered 14.4% in March, which is the sharpest drop since August 2014. Last month’s reading is down from the 1.1% gain in February and is worse than the -11.9% forecast.
The report also found that demand for transportation equipment plummeted 41%, but core capital goods orders edged up 0.1%.
On Friday, the University of Michigan released its various economic measurements and expectations. The monthly study found that consumer sentiment plunged to 71.8 and consumer expectations fell to 70.1. Inflation expectations dipped to 2.1%, but five-year inflation expectations rose to 2.5%. Consumers’ views of current conditions cratered from 103.7 in March to 74.3 in April.
Next on the data front, wholesale inventories and the S&P/Case-Shiller Home Price index will be published.
Meanwhile, President Donald Trump signed a $484 billion coronavirus relief bill that is the fourth packaged passed by Congress, and lawmakers are already looking to the next stimulus bill. The latest legislation includes $310 billion in new funds for the Paycheck Protection Program that offers small business loans, which originally ran out after $350 billion almost immediately dried up. It will also include $60 billion for smaller lenders and $60 billion for the Small Business Administration’s (SBA) disaster assistance loans and grants.
Washington is taking unprecedented action to contain the economic fallout from COVID-19. The White House is exploring many avenues to find ways to pay for the historic levels of spending, such as selling corona bonds, issuing long-term bonds (50 and 100 years), and getting the Federal Reserve to scoop up more Treasurys.
The US Dollar Index, which measures the greenback against a basket of currencies, is seesawing at the end of the trading week. The index rose 0.04% to 100.50, from an opening of 100.47, at 17:10 GMT on Friday. It is on track for a weekly rise of 0.7%.
The USD/CAD currency pair advanced 0.29% to 1.4114, from an opening of 1.4075. The EUR/USD jumped 0.09% to 1.0789, from an opening of 1.0778.

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