THE TAKEAWAY:USD Pending Home Sales (JUN) (YoY) > +9.1% versus +8.3% expected, from +11.2% (revised down from 12.5%) > USDJPY BULLISH

US Pending Home Sales in June increased at a faster pace than expected, showing a +9.1% y/y increase compared to the Bloomberg News survey expected +8.3%. Although May’s figures were revised down from +12.5% to +11.2% y/y, the market still reacted bullishly. The housing sector has been one of the underpinnings of the US economic recovery. In recent weeks, housing data has been mixed. June Housing Starts declined -9.9% m/m, far below the Bloomberg News survey expectations of +5.0%. On the other hand, June New Home Sales have increased +8.3% m/m, much higher than Bloomberg News survey expectations of +1.7%.

The positive Pending Home Sales data today adds to the broad picture of a rebounding housing sector that has stagnated recently. The SPDR S&P Homebuilders ETF (Ticker: XHB) is up +11.39% YTD, but down -3.49% in the last five trading days (at the time of writing).

USDJPY 1-minute Chart: July 29, 2013

US_Pending_Home_Sales_Increase_Faster_Than_Expected_body_Picture_1.png, US Pending Home Sales Increase Faster Than Expected

Charts Created using Marketscopeprepared by Kevin Jin

The USDJPY immediately gained about +10 pips after the data release. It reached as high as ¥98.11 before meeting some slight resistance. Overall the reaction is rather muted. The net change after the data release is about +5 pips at the time of writing.

--- Written by Kevin Jin, DailyFX Research

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