US New Home Sales is released monthly, and provides analysts with important data on the health and direction of the housing sector. A higher reading than the market prediction is bullish for the dollar.
Here are all the details, and 5 possible outcomes for USD/JPY.
Published on Wednesday at 14:00 GMT.
Indicator Background
US New Home Sales provides analysts and investors with a snapshot of the strength of the US housing market, one of the most important sectors of the economy. As a house is likely to be the largest purchase that a consumer will make, this indicator also helps analysts track consumer spending and confidence.
New Home Sales has looked very sharp. The indicator has beaten the estimate for the past two releases, and the previous reading of 476 thousand was the indicator’s best showing since 2008. The markets are looking for more, with the estimate for the July release standing at 482 thousand. Will the indicator repeat with another strong showing?
Sentiments and levels
The Japanese economy has been getting some tough medicine in the form of Abenomics, and slowly but surely is showing some improvement. There was a thumbs up from the BOJ last week, which expressed cautious optimism about economic conditions in its recent policy meeting. If this week’s Japanese inflation releases continue to improve, this could improve market sentiment and bolster the yen. Over in the US, the hot issue of QE tapering by the Federal Reserve remains unresolved after Bernanke’s uneventful testimony before Congress. Overshadowed by Bernanke were some strong US releases, and if US data continues to look good this week, the dollar could push higher. So, the overall sentiment is neutral on USD/JPY towards this release.
Technical levels, from top to bottom: 101.44, 100.85, 100, 98.90, 97.80 and 96.71.
5 Scenarios
- Within expectations: 477K to 487K: In such a case, USD/JPY is likely to rise within range, with a small chance of breaking higher.
- Above expectations: 488K to 493K: An unexpected higher reading can send USD/JPY above one resistance level.
- Well above expectations: Above 493K: A sharp increase could propel the pair past a second resistance line.
- Below expectations: 471K to 476K: A reading lower than forecast could send USD/JPY below one support level.
- Well below expectations: Below 471K. A very weak release could push the pair below a second support level.
For more on the yen, see the USD/JPY.
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