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The U.S. Dollar Tumbles Despite Strong Housing Data in November

The U.S. Dollar Tumbles Despite Strong Housing Data in November

2011-12-20 15:16:00
Trang Nguyen,
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THE TAKEAWAY: U.S. Building Permits and Housing Starts Unexpectedly Rose> Promising Signal on Housing Recovery >U.S Dollar Slides versus Most of its Major Peers

Both privately-owned housing starts and building permits surged to the highest level since April 2010 in November, a promising sign for the U.S. mortgage market that has been struggling since a severe crash in 2008. It is evident that record-low interest rate coupled with declining home prices helped improve the housing market, though the pace of recovery still slowed in year 2011.

U.S. Housing Starts and Building Permits: April 2010 to Present

122011_US_Housing_Starts_and_Building_Permits_November_body_x0000_i1026.png, The U.S. Dollar Tumbles Despite Strong Housing Data in November

Prepared by Trang Nguyen

The report jointly issued by the U.S. Consensus Bureau and the Department of Housing and Urban Development showed that the number of privately owned new house surprisingly climbed 9.3 percent to a seasonally adjusted pace of 685 thousand in November after retreating 2.9 percent in October. The reading tops median estimates as economist surveyed by Bloomberg predicted a modest gain of 1.1 percent to 635 thousand. The rise was spurred by 2.3 percent gain in single-family starts. From twelve months earlier, starts advanced 24.3 percent. October figure was downwardly revised to 627 thousand from 618 thousand.

Meanwhile, building permits hit the twenty-first month high in November. The gauge of new constructions rose 5.7 percent to a seasonally adjusted annual pace of 681 thousand in November, following a 10.9 percent increase in October. The print also exceeds consensus projection of 635 thousand. From a year earlier, U.S. building permits rallied 20.7 percent.

AUD/USD 1-minute Chart: December 20, 2011

122011_US_Housing_Starts_and_Building_Permits_November_body_Picture_1.png, The U.S. Dollar Tumbles Despite Strong Housing Data in November

Charts created using Strategy Trader– Prepared by Trang Nguyen

The greenback lost ground versus most of its major peers before North America trading session today as market participants scaled back their appetite for risks. As can be seen from 1-minute AUDUSD chart above, the dollar tumbled versus high-yield currency despite of strong housing data released today. The AUDUSD pair hiked approximately 60 pips from 1.0000 to 1.0060 following the report. The Relative Strength Indicator rose above 70-level, an overbought territory, signaling that foreign exchange trading crowd was aggressively purchasing the aussie while cutting their greenback holdings. At this time this report was written, the Australian dollar trades above parity at 1.0052 U.S. dollars.

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

To contact Trang, email tnguyen@dailyfx.com

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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