The US dollar is trading with relative stability this Wednesday, consolidating within a tight range as markets carefully analyze a series of recent economic data that suggest mixed signals about the strength of the world’s largest economy.
The latest durable goods orders report for February surprised to the upside, showing an increase of 0.9%, compared to expectations of a 1% decline.
Although lower than the robust 3.3% growth recorded in January, this data still reflects some resilience in key sectors such as transportation, machinery, and electrical equipment, which could partially ease concerns over an imminent economic slowdown.
However, the optimism sparked by this figure is counterbalanced by a 1.5% drop in non-defense capital goods orders.
This indicator, crucial for measuring business confidence and future investment, posted its first contraction in four months, declining 0.3% excluding aircraft.
This setback appears to reveal growing caution among US companies, likely driven by uncertainty surrounding trade and tariff policies implemented by the Trump administration.
Meanwhile, US consumer confidence showed concerning signs in March. The overall index plummeted to 92.9, reaching its lowest level since 2022. Particularly alarming was the decline in the expectations index, which fell to 65.2, hitting a 12-year low. This drop reflects growing pessimism among American households regarding the economic outlook, worsened by negative perceptions of trade policies and their potential impact on inflation and employment.
Inflation, and its anticipated evolution in the coming months, has become a key factor influencing market sentiment toward the dollar. Markets are especially focused on the release of the PCE index, the Federal Reserve’s preferred measure of inflationary pressures. Should this figure show a significant increase, the Fed may be prompted to maintain a cautious and restrictive stance, thereby supporting the dollar. Conversely, a more moderate reading could lead the central bank to consider less aggressive adjustments, putting downward pressure on the US currency.
In conclusion, as markets continue to digest these contradictory signals, the dollar appears likely to remain within a tight range in the short term. Uncertainty over trade policy, combined with mixed signs of economic strength, create a challenging operational environment. As such, caution prevails among investors and businesses, and the market remains on alert, aware that in the current climate, more than ever, clarity on economic and trade policy will be crucial to shaping the near-term future of the US dollar.
