Weaker USD Helping Stocks

US stock markets remain well-bid into the middle of the week as USD stays muted on the back of a set of weaker-than-forecast data yesterday. Following on from the weak January retail sales data we saw the prior week, durable goods yesterday came in well below forecasts. The headline monthly figure came in at -6.1%, down sharply from the prior month’s -0.3% and well below the -4.9% the market was looking for. The core figure was weak too, printing -0.3% from 0.5% prior, below the 0.2% the market was looking for. Additionally, consumer confidence was seen falling to 106.7 from 110.9 prior, well below the 114.8 the market was looking for.

Fed Easing Expectations

With US data having hit a soft patch recently, the US Dollar rally has lost some steam for now. The Fed has reaffirmed its position on rates recently, stressing that it is in no rush to ease and will wait for signs that inflation is moving sustainably back to target. However, if we see data continuing to weaken across key indicators, this will likely lead the market to start front-running a potential shift in sentiment, pulling USD down and leading stocks higher.

US GDP Due Next

Looking ahead today, focus will be on the latest advance US GDP figures.  Expected unchanged at 3.3%, any downside in today’s reading should be firmly bullish for stocks, lifting the chances of H1 Fed easing. On the other hand, an upside beat will likely fuel fresh USD strength, curtailing stocks somewhat.

Technical Views

Nasdaq

For now, the Nasdaq is stalled at the 18112.72 level, creating risks for a potential double top, in line with bearish divergence in momentum studies. Should we turn lower, 17693.37 and the bull channel lows will be the key area to watch, opening a test of deeper support at 16982.40 if broken.

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