What the Durable Goods Report Means for Forex Trading

Categorized: business | 4 comments

The Durable Goods Report came out positive last week sending the stock market on a rally.  That rally helped the stock market have the best month since the beginning of the year.  Whatever your forex trading strategies are, you need to know what these periodic economic reports do to the financial markets.

Durable Goods Report comes out around the 20th of the month by the US Census Bureau.  It measures new orders on durable goods, which is higher priced items that last longer than 3 years or more.

Investors take this as a sign that businesses are confident in the US economy.  They are investing in capital equipment getting ready for expansion.  That is a good sign for the economy.  That pushed the stock market up, which in turn sent the USD down in value.

Some of it was due to the Fed’s announcement the week before that they would do quantitative easing to make borrowing cheaper.  That basically means that they would pump printed money into the economy so that businesses have cash to invest and expand.  The Durable Goods Report told us that they were going to do that anyways.

In any case, the US stock market and the USD have been in an inverse relationship ever since the 2008 financial crash.  They have continued on in that relationship and will probably do so until the US economy is in full recover and expansion mode.  So you should short the USD or get a put option if you do currency option trading on this market.

The other thing that would send the USD higher is if the emerging markets started to crash systematically.  In order for this to raise the USD price level, all of the emerging markets would have to crash in sync with each other and that USD was the only place to go.

Also, the gold market has been hitting new highs.  That is a signal that investors are wary of the USD.  Gold is always seen as the alternative to the USD.

Other articles of interest include topics: forex trading strategies, best forex trading, forex investing, forex investments, forex options trading, currency option trading.


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