S&P/Case Schiller HPI (Jan) Actual -19.0%, Expected -18.5%, Previous -18.6% (Revised from -18.5%)

Release Explanation: This is a report on monthly home prices of existing single family homes. The report is an index of prices rather than the prices themselves and covers 10 city and 20 city composites. Housing reports are especially important at this time, given the state of the economy and financial markets. Retail Sales, CPI, and PCE in the US. A happy householder will usually lead to a strong economic outlook. A miss here, either way, and the Markets gets to see the real confidence of the US consumer. There is a very strong impact on the sentiment towards the US Dollar from this report.

Trade Desk Thoughts: Prices for existing single-family homes in 20 metropolitan areas fell 19.0% in the year to January, according to the latest report from the S&P/Case-Schiller Home Price Index, a new record pace of decline. Prices have now declined by 29% from the peak in May 2006.

As painful as it is, the only way out of the housing crisis is to let prices fall to the point where they can meet demand, said Matthew Carniol, chief currency strategist at TheLFB-forex.com. We're already seeing demand for housing increase in the hardest-hit areas such as parts of California and Florida.

Fourteen of twenty major metropolitan areas posted price declines of more than 10% from a year earlier.

The indexes showed prices in 10 major metropolitan areas fell 19.4% in January from a year earlier and 2.5% from December. The drop marks the 10-city index's 16th-straight monthly report of a record decline. As of January, the 10-city index is down 30% from its mid-2006 peak. The two indexes have fallen every month since August 2006, 30 straight.

For the 10th straight month, no region was able to avoid a year-over-year decline. Phoenix and Las Vegas were again the worst performers, with drops of 35% and 33%, respectively, from a year earlier. San Francisco again followed, with a decline of 32%. Phoenix is down 49% from its peak in June 2006. Dallas has been the least hurt, down 11% from its peak in June 2007.

Compared with a year earlier, Dallas and Denver again had the best relative performance, with annual declines of 4.9% and 5.1%, respectively.

Forex Technical Reaction: S&P futures declined about 1.5 points after the report but were still up 7 points on the day. The dollar has weakened overnight against the better-yielders and gained on the yen.