Worst Pending Home Sales Since May 2010 Stunts USD/JPY Rally
- Pending Home Sales plunge in September, worst performance in over three years.
- Decline concerning as US interest rates fell during period, which typically spurs spending.
US economic data has been disappointing the past several weeks and today’s batch has done little to calm fears of a slowing US economy. Despite the drop in US mortgage costs during September – the Bankrate.com National 30-year average fell by -4.04% during the month – US home sales managed to suffer greatly. In fact, the lack of demand in the housing market in the weeks leading up to the US government shutdown proved to be the weakest since May 2010, when Pending Home Sales dropped by -28.9% m/m.
With another important piece of data pointing to the negative psychological impact the US government shutdown had before it even began, there’s a growing body of evidence to suggest that the US economy is slowing. Market participants widely believe that as a result of recent fiscal developments, the Federal Reserve will keep QE3 on hold this Wednesday.
Here’s the data slowing the US Dollar’s intraday rebound:
- Pending Home Sales (SEP): -5.6% versus 0.0% expected, from -1.6% (m/m); +1.1% versus +3.6% expected, from +2.8% (revised lower from +2.9%) (y/y).
AUDUSD 1-minute Chart: October 28, 2013
Charts Created using Marketscope – prepared by Christopher Vecchio
Following the US housing data, the USDJPY began to ease back from its daily highs, slipping from ¥97.75 in the minutes ahead of the release to as low as 97.65 soon after. While only a minor drop, the data helped spurn turns more vigorously in other USD-based pairs. The EURUSD, for example, recovered from its daily low of $1.3175 and was last quoted at 1.3791.
--- Written by Christopher Vecchio, Currency Analyst
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