The US economy appears to have entered a soft patch at the end of Q3’15, further supporting the Federal Reserve’s decision to keep rates on hold in September. Even though the Fed is gathering for its October policy meeting, in recent weeks market measures of rate expectations have all but priced out a rate hike tomorrow (see chart above: Fed funds futures contract peg a 4% chance of a hike in October).
Here’s the data moving the US Dollar this morning:
– USD Durable Goods (SEP): -1.2% versus -1.5% expected, from -3.0% (revised lower from -2.3%) (m/m).
– USD Durables ex Transport (SEP): -0.4% versus 0.0% expected, from -0.9% (m/m).
– EURUSD eases back to $1.1050.
Weaker US economic data has been a theme of recent, a trend that started back in late-August/early-September after soft CPI, retail sales, and jobs growth readings. Although today’s release of the September US Durable Goods Orders report didn’t technically disappoint expectations, it still wasn’t a good print; it was just less worse than anticipated.