U.S. Dollar Pares Declines as Pending Home Sales Surprisingly Picked up in October

THE TAKEAWAY: The U.S. Pending Home Sales Unexpectedly Rose in October> Three of Four Regions throughout the United States Registered Gains>U.S. dollar Pares Loss

Sales of pending homes surprisingly rebounded for the first time in four months in October as more job creations recently coupled with exceptionally low interest rate policy encouraged more Americans to purchase dwellings. According to the report issued by National Association of Realtors today, pending home sales mounted up 10.4 percent at a seasonally adjusted rate, the biggest gain since December 2010, after disappointedly slipping 4.6 percent in September. The reading is five times consensus forecast as economists from Bloomberg survey called for a gain of merely 2 percent. Projections ranged from a plunge of 1.5 percent to a surge of 2.8 percent. From a year earlier, pending home sales advanced 7.3 percent. Better-than-anticipated pending home sales today, together with rising existing home sales reported a week ago, indicates a notable improvements in sales and building activities in the U.S. housing market.

U.S. Pending Home Sales: June 2010 to Present

Prepared by Trang Nguyen

Three of four regions throughout the United States witnessed the sizeable gains in number of contracts to purchase previously owned home in October. The Midwest registered for the biggest advance in pending home sales, soaring 24.1 percent from the previous month. Also, sales in the Northeast and the South picked up 17.1 percent and 8.6 percent, respectively, more than offsetting the decline in September. In contrast, the West is the only region reporting a 0.3 percent loss in October sales, marking the third straight month deterioration in the numbers of potential home buyers in that region.

USD/CAD 1-minute Chart: November 29, 2011

Charts created using Strategy Trader– Prepared by Trang Nguyen

The U.S. dollar is the worst performer against its major trading partners in North America trading session today since the world’s central banks coordinately intervene to lower swap rate that helps boost liquidity in global financial markets. Regardless, the greenback pares losses somewhat following the pending home sales report. As can be seen from the one-minute USDCAD chart above, the currency pair climbed approximately 40 basis points from 1.0140 to 1.0180. At the time this report is written, the U.S. dollar trades at 1.01803 Canadian dollars, down 1.33 percent. The greenback also trims losses against high-yielding currencies, depreciating 2.4 percent versus the aussie and falling 2 percent versus the kiwi.

--- Written by Trang Nguyen, DailyFX Research Team for DailyFX.com

To contact Trang, email tnguyen@dailyfx.com