Dollar whacked despite decent data
The US dollar has fallen to the bottom of the currency pile today as the market shrugs off decent reports on initial jobless claims and durable goods orders. There were some caveats in the data but certainly nothing that screams to sell the dollar.
My guess is that the poor shipments data will lead to lower estimates of next week’s Q2 GDP report and traders want to get out of dollars. The consensus for the quarter has fallen to 1.1% from 1.4% two weeks ago. Just yesterday, Morgan Stanley cut its forecast to just 0.4% and Goldman released an estimate for 0.8%. Those estimates could be lowered imminently, raising the possibility that Q2 growth could be almost flat. Hard to imagine the Fed would taper in September with growth so close to nil.
The dollar decline today means USD has been the worst performer in three out of the four days this week.