U.S. to benefit from higher spending, durable goods orders

A 0.5% increase in household spending helped the world's largest economy to expand at a solid pace at the end of 2013. A rebound in home values and a stock rally are boosting wealth among upper-income Americans, hence, pushing retailers' income higher. Moreover, an improvement in the labour market is suggesting spending gains will become more broad-based, enabling the U.S. economy to gain momentum next year. At the same time, Thomson Reuters/University of Michigan's gauge of consumer mood soared to 82.5 this month, hitting the highest since July. The only soft spot for households remain incomes, which ticked up just 0.2% lagging behind the 0.5% expected by analysts. 

Meanwhile, U.S. durable goods orders increased well ahead of forecasts in November, while core orders also surpassed expectations, according to the official data of the U.S. Commerce Department on Tuesday. Total durable goods including transportation items advanced by a seasonally adjusted 3.5% last month compared to analysts' forecasts for a 2% gain. Durable goods orders in October were revised down to a 0.7% drop from previously reported decline of 1.6%. Core durable goods orders, which strip out volatile transport items, rose by a seasonally adjusted 1.2% in November, overshooting expectations for a 0.7% gain. Following the release of data, EUR/USD fell as much as 0.14% to trade at 1.3677.