Dollar maintains post FOMC strength and is lifted by news that Democrats controlled US House passed Obama's $819b stimulus package with getting any votes from Republicans. The Japanese yen strengthens mildly too even though Asian stocks followed rally in US equities overnight. Higher yielders are leading the top movers chart in weakening against dollar and yen. The New Zealand dollar is in particular weak after RBNZ's larger than expected 150bps rate cut overnight. The development so far is still inline with the view that Dollar's pullback since last week is merely is correction in the near term up trend. Focus will turn to the string of economic data from Europe and US today.
In the US, durable goods orders is expected to show another substantial decline (consensus:-1.8%, January: -1.5%) in December after the new orders index in the manufacturing ISM report plunged to the lowest level since 1948. Both ex transportation and ex defense indices are expected to have dropped severely, by -2.7% and -2.1% respectively. Initial jobless claims should remain elevated at 575K for the week ended Jan 24 while 4-wweek average is expected to have risen to 540 after noticeable fall to 519 in the previous 2 weeks. Economists expect new home sales to fall slightly to 0.4M in December from 0.41M in November. However, since mortgage rates have been dropping since late November, some home sales data have started to shown improvement, we may have upside surprise today. Canada's PPI in December is expected to have contracted further by 2% mom following a 2.6% decline in November.
In Germany, unemployment rate would have picked up to 7.7% in January from 7.6% a month ago with the number of unemployment increased by 30K in January. Eurozone's sentiment likely deteriorated further in January with business climate lowering to -3.5 from -3.17, economic sentiment dropping to 65.8 from 67.1 and consumer confidence contracting to -31 from -30, in the previous month. M3 money supply has been highly volatile in the 16-nation region recently and is expected to have grown 7.6% yoy in December following an increase of 7.8% in November due to weak loan expansion.
Data released today so far saw UK Nationwide House price drop further by -16.6% yoy in Jan. In Japan, retail sales in December plunged -2% mom in December, more than market expectation of -0.8% drop and -0.1% drop November. On annual basis, it fell -.7%, the biggest decline since 2005 as consumers reduced spending on unemployment concerns. New Zealand's trade deficit came in at NZD -347M in December, worse than consensus of NZD -100M, after a revised deficit of NZD -588M with exports rose 4.8% from a year ago to NZD 3.85B and import dropped for the second month to NZD 4.2B.
Technically, despite breaching the channel support briefly, Dollar index quickly rebounded back, keeping the channel intact. Break of 84.95 minor resistance suggests that pullback from 86.81 has completed and turns intraday bias back to the upside. Rise from 77.69 should still extend to retest 88.46 high on resumption after taking out 86.81. However, note that below 83.58 again will confirm that rise from 77.69 has completed. Also, the corrective structure suggests that it's merely part of consolidation from 88.46, which is still in progress. Another fall should be seen to retest 77.69 at least before resuming the medium term rise. New Zealand dollar has taken out mentioned low of 0.5164 and thus confirming that recent down trend is resuming for a test of 0.5 psychological support.