Right before and immediately after Christmas, the US released a batch of positive indicators which seem to support the tapering decision made just one week before the holidays.
In the sleepy holiday markets, the positive dollar impact is limited to USD/JPY, which reached new 5 year highs.
The data:
On Tuesday, just before the holiday, the US released durable goods orders figures. The headline number for November rose by 3.5%, more than double the expectations for a rise of 1.7%. In addition, this came on top of a drop of 1.6% in October, better than the initial report of ‘2%.
The more important core figure advanced by 1.2%, better than 0.9% expected and also enjoying a revision of the previous fall: from -0.1% to 0.4%. The headline numbers are sometimes skewed by the defense sector.
The second dish, just before the holiday, came from New Home Sales: these came out at an annual level of 464K, better than 449K expected. Also here, the previous number saw a significant upgrade from 444K to 474K. New home sales trigger infrastructure investment and a lot of other economic activity.
Markets were practically paralyzed during the 25th, but the 26th brought another positive number: jobless claims dropped back to 338K, better than 346K expected. This weekly number was distorted in recent months by the government shutdown and computer issues in California.
USD/JPY
It is unsurprising that the biggest mover is dollar/yen: American figures often have the biggest impact on this pair. In addition, Japan didn’t enjoy a holiday, and traders in Tokyo are usually more active with the local currency than with others.
The pair advanced towards the round number of 105 and is trading at the highs of 104.74 at the time of writing. Many analysts see the pair continuing its move upwards during 2014.
All in all, the US economy is ending 2013 in a positive note. After the big policy change has been made with tapering, another taper cannot be ruled out in January.
