More good news from the housing sector: new home sales rise to 546K, better than expected. April’s number was revised up to 534K. All good. This is the highest since 2008 – 7 years. Revisions went back all the way to February. The revisions mean that the rise is only 2.2% m/m.
The dollar is on the rise, extending the gains that Powell generated.
At the same time, the Richmond Manufacturing Index hit 6 points, better than 3 expected. Beforehand, Markit’s flash manufacturing PMI dropped to 53.4 points, worse than 54.2 predicted.
Sales of new homes carried expectations to advance to 524K (annualized) after 517K in April (before revisions). Construction of new homes triggers a wide variety of economic activity, such as infrastructure investments, etc. There is a good correlation between construction and the wider economy.
Earlier, durable goods orders disappointed. However, the hawkish words from Fed member Powell boosted the US dollar.
Powell talked about a September liftoff and probably another move in December. This overshadowed the shortcoming in durable goods orders, including core data and revisions. Existing home sales beat expectations in yesterday’s release.
More: EURUSD Can Decline Towards 1.1050 – Elliott Wave Analysis
