US Dollar Pares Losses On Strong Industrial Data But Yellen Looms

American industrial orders continued to grow at a healthy pace in July but the headline number was impacted by a continued fall in transportation spending.

The dollar pared losses against many of its major counterparts Friday after receiving a boost from stronger than expected industrial data, although the looming shadow of Janet Yellen could keep a lid on any further recovery ahead of her Jackson Hole speech.

Core new goods orders, which exclude transportation items, rose by 0.5% during between the end of June and July according to data released by the Census Bureau - a rate that was far ahead of the 0.1% consensus forecast from economists.

The core figure came in contrast to the headline durable goods number, which showed total goods orders falling by 6.8% during the month, mostly due to a continued decline in the transportation items component.

Transportation orders have fallen for three of the four recent months, which might suggest that American businesses are growing more reluctant to invest in large capital equipment items such as aircraft, rail freight and automobiles.

“The overall drop of 6.8% essentially wipes out the prior month's massive 6.4% gain, but that just captures a huge swing in aircraft. Orders ex-transport were up a decent 0.5%, and stand up nearly 7% from a year ago,” says Avery Shenfel from the economics team at CIBC Capital Markets.

President Trump threatened lawmakers with a government shutdown earlier this week if Senate Republicans cannot agree a bill that provides funding for the controversial Mexico border-wall to begin. He could do this by refusing to sign any bill that comes to his desk without the provision.

A government shutdown would occur when the debt ceiling, a self-imposed legislative limit on how much debt the US can have, gets hit and lawmakers have not agreed to extend the limit.

The debt ceiling is an emergency that allows the US Treasury to conserve cash in order to continue meeting sovereign debt payments. Analysts expect that it will get hit some time in October.

President Trump threatened lawmakers with a government shutdown earlier this week if Senate republicans cannot agree a bill that will provide funding so that construction of the controversial Mexico border wall can begin.

A government shutdown would occur when the debt ceiling, a self-imposed legislative limit on how much debt the US can have, gets hit and lawmakers have not agreed to extend the limit.

It is an emergency measure that allows the US Treasury to conserve cash in order for it to continue to meet sovereign debt payments. Analysts expect that the debt ceiling will get hit some time in October.