Existing Home Sales Report – January 2009
February 25th, 2009 Posted in Market Movers
Name: Greg
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The U.S. Existing Home Sales report is a leading economic indicator used to measure the number of already existing homes that were sold during the previous month. This report predominantly acts as a precursor for other housing reports, such as New Home Sales, and offers an early glimpse into these later reports.
It is a leading indicator of housing demand and economic health because the sale of an existing home impacts a wide variety of consumer spending figures, such as renovations for the home purchased, and mortgages being taken out to purchase the home.
Inline or Better than Market Forecasts:
Expectations for this month are suggesting that the U.S. Existing Home Sales report will show that home sales rose to 4.78M in January, reflecting a 0.04M increase from December. Such a result could demonstrate a slightly growing housing sector in the U.S., which has been one of the U.S. economy’s most troublesome sectors these past months.
An increasing figure will most likely be interpreted by investors as proof that the American people are beginning to buy more homes, and that the mortgage banks are less reluctant to offer mortgages as they used to be. Such a scenario may extend the greenback’s recent bullish movement, and the EUR/USD may test the 1.2600 level.
As a result of the mortgage crisis in the U.S., which has continued to threaten world markets, the importance of the housing sector has increased significantly in recent months and its impact on the nation’s currency is always felt.
Worse than Forecasted:
When the actual figure is lower than forecasted, traders are likely to see the USD depreciate against its currency pairs and crosses. Investors are now following the opportunity to make profits from their recently opened buy positions on the USD, but a worse-than-expected figure on the Existing Home Sales report, such as 4.50M for example, may convince them to unwind their USD positions in exchange for other assets, helping to push the USD lower against its currency rivals.
Americans lacking the confidence to purchase homes is yet another indicator that their economy is in dire straits. In this turn of events, the EUR/USD might correct itself up to reach as high as the 1.3000 level in the short run.
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Tags: economic indicators, EUR/USD, Forex, forex blog, home sales, US Existing Home Sales, USD, USD Trading
