USDJPY Climbs After US June Pending Home Sales Unexpectedly Drop
THE TAKEAWAY: [US Pending Home Sales Unexpectedly Fall in June for second time in last three months] > [Slower job growth and tougher lending restrains home sales] > [USDJPY bullish]
The number of people signing contracts to purchase previously owned homes unexpectedly fell in June for the second time in the last three months, signaling restrained recovery of the housing market. The National Association of Realtors reported today that its pending home sales index, a forward-looking indicator based on contract signings, declined 1.4 percent in June from a month earlier to 99.3, following a 5.4 percent rise in May that was downwardly revised from 5.9 percent initially reported. The consensus forecast of economists surveyed by Bloomberg News had called for a 0.3 percent increase in June. On a yearly basis, pending home sales fell well short of expectations for a 12.1 percent rise, gaining only 8.4 percent in June.
Despite record-low mortgage rates, slower job and wage growth, and tougher lending standards are holding back momentum in the property market. Fewer home listings for sale have also meant that there are few contract signing opportunities.
USDJPY 1-minute Chart: July 26, 2012
Chart created using Market Scope – Prepared by Tzu-Wen Chen
Trading of the USDJPY pair was mixed in the initial minutes after the pending home sales data was released. However, the greenback gained traction against the yen, climbing to a high of 78.27 from pre-data levels of 78.19 yen. At the time this report was written, the USDJPY pair was trading at 78.22 yen.
--- Written by Tzu-Wen Chen, DailyFX Research