US New Home Sales for the month of June posted a positive showing, as the actual figure of 8.3% trampled Bloomberg median forecasts of 1.7% to achieve its highest level in nearly 5 years. This print showed a downward revision, with the monthly figure decreasing to a 1.3% (revised) from a 2.1% advance the month prior. This constitutes a 497,000 increase in new homes across the United States.
This upturn in US New Home Sales provides a timely strength in housing market conditions, which may ultimately lead to an increase in overall consumption. Often this serves to catalyze demand for goods, services and those employees which provide them. Thus, these gains are anticipated to propel residential construction and home values giving conviction to a strengthening US economy and simultaneously adding clarity to an eventual Fed taper, which has been heavily dependent on market data.
EUR/USD 1-Minute Chart: July 24, 2013
Price action following the US New Home sales, initially served to foster a bullish US Dollar as the EUR/USD declined nearly -22 pips following the report, signaling an appreciating dollar. However, the pair shortly took back its losses gaining nearly +39 pips before declining further. Currently, the pair is consolidating around the 1.3226 level which also happens to serve as the 50% Fibonacci retracement from February’s highs to April’s lows and has also proved to be near-term support.
--Written by Jonathan DePaolis, DailyFX Research
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