Less than expected decline in the Durable Goods Orders along with higher than projected new home sales added to optimism of a possible bottom in the economic downturn. U.S. New Home Sales fell 0.6% in March from 358,000 to a seasonally adjusted annual rate of 356,000. Nonetheless, overabundance of unsold new homes and competition from foreclosed properties situated a 12% drop in the median sales price from a year earlier to $201,400.
Durable Goods Orders fell -0.8% in March slightly better than expected -1.5%. The latest figure suggests that manufacturing sector continues to slump as orders shrank for the ninth month over the span of a year. Nevertheless, a key measurement of future activity, capital spending rose for the second consecutive month by 1.5% suggesting of a possible turnaround in the not too distant future. Although the figures remain in the contracting territory, signs of a bottoming in the economy started to emerge. Markets took the news as a positive indication of a future turnaround in the U.S. economy as risk appetite returned, advancing equities and putting pressure on the Dollar.
The U.S. Dollar weakened considerably against other major counterparts, yet remained unchanged against the Pound as U.K. economy contracted by bigger than anticipated margin. EUR/USD soared on the day before stalling the advance at 1.3300 level. The pair rose for the fourth consecutive day as signs of bottoming in the global recession started to manifest. Nonetheless, a key area of resistance at 1.3500 renders on being the next level to be tested and unlikely to be surpassed unless the markets observe some positive news from the Euro-zone.
