It has been falling for three months, yet the US dollar remains completely unmoved?

FX Finance App News—— On Tuesday, April 7, the U.S. released February data on new orders for durable goods, prompting close attention in the market. The data fell 1.4% month over month to $315.5 billion, marking the third consecutive month of decline and a drop far beyond the market’s expected 0.5% decrease. Meanwhile, the U.S. dollar index held steady around 100.00 in a narrow range before and after the data release, with no significant one-direction trend. Against this backdrop, the complexity of manufacturing signals stands out: on the one hand, weak orders reflect pressure on the demand side; on the other hand, subdued currency reaction suggests multiple factors interwoven, including seasonal fluctuations in the transportation sector and other fundamental variables from the same period.

Detailed Breakdown of New Orders for Durable Goods

The total value of new orders for durable goods in February decreased by $4.4 billion from the previous month to $315.5 billion, continuing the revised 0.5% decline from January. The transportation equipment sector contributed the largest drag, with a 5.4% month-over-month drop to $106.1 billion, and it has posted negative growth in four of the last four months. In more detail, non-defense aircraft and parts orders plunged 28.6% to $19.2 billion, becoming the single largest negative contribution, highlighting the highly volatile nature of this subcategory of orders that is often influenced by delivery cycles for major projects. After excluding transportation equipment, new orders actually rose slightly by 0.8%, showing that core manufacturing still has some support. Looking further, new orders for base metals increased 2.2% to $28.6 billion, and mechanical equipment rose 1.5% to $41.1 billion, becoming positive drivers. After excluding defense, new orders fell overall by 1.2%. The following is a comparison of key data:

Category Month-over-month change (%) February amount (in $ billions)

| Total new orders | -1.4 | 3155 | | Transportation equipment | -5.4 | 1061 | | Non-defense aircraft and parts | -28.6 | 192 | | Excluding transportation equipment | +0.8 | — | | Base metals | +2.2 | 286 | | Machinery | +1.5 | 411 |

This breakdown shows that the overall data is dominated by volatility in a single sector, while moderate year-over-year gains in core indicators provide a balancing perspective, contrasting with some leading indicators that suggest a recovery in demand. However, the actual hard data still points to a cautious demand side.

In-Depth Analysis of Manufacturing Demand Signals

Durable goods orders serve as a leading indicator of corporate capital expenditures and directly map to the willingness to invest in fixed assets, with a relatively high weight in the contribution to quarterly GDP. With declines for three consecutive months, especially the drag led by transportation equipment, it suggests that manufacturing as a whole is facing pressure from a slowdown in demand, which may transmit to industrial production, job openings, and inventory management. Transportation-sector volatility has historically been high: a one-off delay or cancellation can create a large deviation, and the fact that there have been four declines over the past five months further reinforces the trend signal.

By contrast, the 0.8% growth after excluding transportation stems from support from base metals and machinery, or may reflect resilience in downstream non-cyclical demand, such as equipment upgrades or replenishing inventories in the supply chain. But the contrast with leading indicators is noteworthy: leading indicators had shown that demand from goods producers was strong, yet actual orders were weaker than expected this time. This could be due to differences in the sample, seasonal adjustment, or firms’ wait-and-see sentiment amid macroeconomic uncertainty. If this pattern continues, a slowdown in manufacturing investment could either amplify or worsen the risk of a downturn in the economic cycle; traders often use this to assess the subsequent trajectory of industrial output indices and purchasing managers’ indices. Overall, the data indicates that manufacturing is not in a total collapse, but rather a coexistence of structural pressure and localized resilience—requiring confirmation of persistence by subsequent monthly data.

U.S. Dollar Index Market Response Logic

After the data release, the U.S. dollar index did not show a clear downside move and largely held steady around 100.00, which contrasts with the intuitive expectation that weak data would typically weigh on the exchange rate. The reason may be that the market has already partially priced in seasonal noise from the transportation sector and instead focuses more on the core rebound signal after excluding transportation. Moreover, the dollar’s performance is driven primarily by interest-rate expectations and yield differentials. This order decline may reinforce expectations for slower growth, but the limited magnitude suggests that other driving factors have the upper hand. Traders noted that the immediate impact of a single manufacturing indicator on the exchange rate is often diluted under a multi-variable framework—especially when data volatility is high—so the exchange rate tends to trade in a range rather than break out into a sustained trend.

Monetary Policy Expectations and Market Outlook

Weak durable goods orders provide new inputs for the Federal Reserve as it assesses economic growth and price stability. A decline in manufacturing investment could ease pressure from capacity bottlenecks and also reduce the risk of rising inflation over the medium to long term, but it could also widen the output gap and prompt policy-path adjustments toward greater flexibility. Still, the slight positive growth in core orders suggests the economy is not experiencing a full slowdown, and policymakers may continue to emphasize a data-dependent strategy. From a long-term perspective, if the order trend remains relatively weak, market expectations for the future path of interest rates may gradually be revised, thereby affecting the relative attractiveness of the U.S. dollar.

(Editor: Wang Zhiqiang HF013)

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