US durable goods orders for October are due Wednesday at 8:30 am ET (1330 GMT).
Better signs on the US economy abound but durable goods orders have been virtually stagnant for the past six month. Traders look to the line on capital goods orders non-defense excluding air, which strips out highly volatile aviation and military orders to get a sense of the underlying economy. Since April, that metric has averaged just over 0.2% growth per month.
In the upcoming report that metric — also known as core orders — is expected to accelerate to 1.0% but economist estimates range for 0.2% to 2.0%.
Durable goods orders non-defense ex air
It’s a key report because if consumers are truly stronger and feeling better about they economy, they are more likely to buy big ticket durable goods.
The overall headline number has a smaller impact but it’s expected to fall 0.6% while the ex-transportation component is expected to rise 0.5%. Shipments are key for GDP and forecast to rise 0.5%.
How to trade it
The durable goods report will be released alongside the PCE report so signals will be mixed.
Generally, the US economy is likely accelerating and core goods orders have been depressed for three months. I see the risk of an upside surprise and that could re-invigorate US dollar longs once again.
