US Durable Goods number smashes expectations and boosts the US Dollar

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The US Dollar had something to shout about yesterday in the form of the US durable goods orders data which showed a 4.0% monthly increase, double what had been forecast. Nine times out of ten the figures would have been dismissed as yet another rogue number in the long history of durable goods unpredictability. It was different this time.

Investors decided the durable goods number was enough to buy the US Dollar at the expense of Sterling, as cable (the market's term for the GBP/USD exchange rate) fell over a cent below a previous level of support (support is referred to in technical analysis as level where a currency pair is expected to rebound).

Until the durable goods number was released, Sterling was having a steady day remaining firm against the Euro, the Australian Dollar, the New Zealand Dollar and Canadian Dollar.

The US Dollar's rally could also be attributed to investors positioning themselves ahead of tomorrow's Federal Reserve meeting in Jackson Hole. The markets are getting increasingly jumpy about whether or not he will announce a fresh round of quantitative easing, as he did on the same occasion a year ago. That jumpiness will probably be enough for investors to ignore any data in favour of Fed Chairman Bernanke's comments.

There certainly isn't much data for the markets to get there teeth into today. Nationwide's index of UK consumer confidence is already out, down by two points at 49 but better than the forecast 46. German consumer confidence was out at 5.2, in-line with expectations.

The CBI's UK retail sales survey is forecast to show a further fall which could weigh on Sterling whilst the weekly US jobless claims numbers feature this afternoon.