The U.S. Dollar is picking up strength this morning as traders shed risky assets. Investors are lightening up positions because of the weaker durable goods data, but the actually selling pressure may have started last night following a disappointing Australian Consumer Price Index number. The Aussie CPI rose less than economists had expected, curtailing gains and leading to the possibility the Reserve Central Bank will refrain from hiking interest rates for the third consecutive month.
Overall, the weak durable goods report sets a bearish tone in the stock market ahead of the opening. This is likely to lead to a profit-taking break. Investors are taking a defensive position this morning. The shedding of risky assets is likely to benefit the Dollar and Treasury markets as traders seek safety in lower yielding assets.
The Euro is still struggling with the .618 retracement level at 1.2998 and the psychological 1.30 price. Although economic data in Europe has been improving while the U.S. economy weakens, upside momentum seems to be slowing indicating that sentiment may be shifting toward risk aversion at least in the short-run.