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US Durable Goods Orders Smash Forecasts as Transportation Surges
US durable goods orders surge 7.9% in April, far above 3.3% forecast. The strong data reduces Fed rate-cut odds, supporting the dollar against the euro and sterling.
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US durable goods orders jumped 7.9% month over month in April to USD 346.0 billion, blowing past the 3.3% consensus estimate. The gain was led by a 21.5% surge in transportation equipment orders to USD 130.9 billion. Underlying demand also ran hot: orders excluding transportation rose 1.1% to USD 215.1 billion, more than double the expected 0.5% pace. Ex-defense orders climbed 8.1% to USD 320.3 billion, signaling that private-sector business investment remains resilient despite elevated interest rates and geopolitical uncertainty.
The print directly challenges the softening narrative that had built after weaker retail sales and consumer sentiment data. For the Federal Reserve, a still-robust manufacturing sector reduces the urgency for rate cuts. That dynamic has immediate implications for the dollar, which gains when the US rate advantage widens.
Rate-Cut Expectations Adjust After 7.9% Orders Jump
The durable goods data feeds into the dollar through the rate-expectations channel. Strong activity numbers lower the odds of a near-term Fed cut, keeping short-dated Treasury yields elevated. The interest rate differential between the US and other major economies remains tilted in the dollar's favor. That advantage is especially pronounced against currencies whose central banks are closer to easing.
Fed officials have stressed a data-dependent approach to policy. The durable goods report is the latest evidence that the economy is not slowing enough to warrant an early cut. Markets had been pricing a September move as a base case. The robust orders data reduces that probability, forcing carry traders to maintain long dollar positions against lower-yielding currencies.