U.S. Pending Home Sales (Jan) Actual 3.2%, Expected 0.1%, Previous 2.0%

Release Explanation: The report covers change in the number of homes under contract to be sold, but still awaiting the closing transaction. It is important since the housing market is included in most economic forecasts including retail sales, CPI, and PCE in the U.S. A happy householder will usually lead to a strong economic outlook, but a miss here, either way, and the Markets gets to see the real confidence of the U.S. consumer. There is a very strong impact on the sentiment towards the Usd via the S&P reaction from this report.

 

Trade Desk Thoughts: The number of signed contracts for home purchases rose in March by 3.2%, the National Association of Realtors said today, a sign that the weakness in housing market may have seen a base in some areas. The previous month saw a 2% rise that set a positive tone in some areas, although it still was a mixed picture overall.  A 0.1% decrease had been expected by economists and that seemed to make the release much more appealing that it may actually be at first site.

 

The median value of homes seems to have dropped low enough to make things affordable, both to borrowers and to appraisers looking to cover the new mortgage valuation. The South and West saw increases of 8.5% and 3.9%, but contracts to buy fell in the Northeast by 5.7% and by 1% in the Midwest.

Forex Technical Reaction: Equity markets opened higher and were trading up by 1% ahead of the release. The dollar weakened in as S&P futures jumped to directly test the 200 day SMA area at 898.00. The U.K. and Japan have been closed overnight, and that has impeded the flow of volume in the forex market, leaving the major pairs higher against the dollar, but only at Asian session highs. It has been a forex rollercoaster ride that has tested the tops and bottoms of tight ranges in the first session of the week.