The New Home Sales Report is released towards the end of every month. A leading economic indicator, it is considered by analysts as an important measure of consumer spending. A higher reading than the market forecast is bullish for the dollar.
Here are all the details, and 5 possible outcomes for JPY/USD.
Published on Thursday at 15:00 GMT.
Indicator Background
The New Homes Sales Report provides analysts and traders with important information about activity in the housing sector. As a new home is likely to be the largest purchase that a consumer will make, this indicator helps measure consumer spending, which is critical for economic growth.
The December reading came in at 315K, which was what the markets had predicted. The positive news is that this is the fourth consecutive reading where the indicator posted an increase, confirming that the US economy is showing improvement. The January forecast calls for a modest increase, up to 321K. Will the indicator prove the markets right, and continue the upwards trend?
Sentiments and levels
After dropping below the 77 level, USD/JPY is up this week, and look for the yen to continue to weaken. US economic indicators continue to signal improvement, and the dollar may resume its recent rallies against most major currencies. So, the overall sentiment is bullish on USD/JPY towards this release.
Technical levels, from top to bottom: 80.25, 80, 79.50, 78.30, 77.50, 77, and 76.50.
5 Scenarios
Within expectations: 315K to 327K: In such a case, the USD/JPY is likely to move within range, with a small chance of breaking higher.
Above expectations: 328K to 334K: An unexpected reading into positive territory can send USD/JPY above one resistance level.
Well above expectations: Above 334K: A sharp increase in housing sales could push the pair above two or more resistance lines.
Below expectations: 308K to 314K: A reading lower than forecast could send USD/JPY below one support level.
Well below expectations: Below 308K: A very poor reading could push the pair below two or more support levels.
For more on the yen, see the JPY/USD.