US new home sales were expected to stand at 422K and came in line with expectations, at 421K. This is a rise of over 7% from the weak figure in July, which was revised to the downside: from 394K to 390K now. While the bounce from the bottom is good news, this bottom was more than confirmed now – it wasn’t a measurement error.
EUR/USD sticks to the 1.35 line, that turns into some kind of magnet. USD/JPY is at 98.70.
It seems that the “tighter financial conditions†as described by the Fed – higher mortgage rates, had an impact on sales of new homes. The change came in May and June, when Bernanke began talking about QE tapering. With the surprising “No-taper†decision, long term interest rates have fallen, and this might have a positive effect on the housing sector.
See how to trade the pending home sales with USD/JPY.
Sales of new homes trigger relatively wide economic activity related to the construction of the homes and the infrastructure around them. The Fed was happy with the recovery, but could be worried by a year over year rise of over 12% in home prices (according to Case Shiller).
Earlier, the US reported a marginal rise in durable goods orders. The publication allowed the dollar to recover.
