10:00am NY Time New Home Sales Forecast 318K Previous 309K
ACTION: USD/JPY BUY 390K SELL 250K
We’ll be looking for a possible trade from the New Home Sales figure, which is expected at 318K; our tradable deviation is 70K, and if the release is lower, it would strengthen risk aversion sentiment and we should look to SELL USD/JPY or possibly the USD/CHF pair as well; if the number is higher, it would fuel risk appetite sentiment, we may see a rally in USD/JPY or USD/CHF and possibly further downward pressure on the already uncertain EUR/USD pair.
However, with the current USD strength as a result of the European uncertainty due to the Greece issue, market could react for a stronger USD either way… Therefore we’ll should look for confirmation before selling USD… (As USD is a safe haven currency, on a weak release we could see a strong USD because of risk aversion, but on a stronger release, given the issues in Greece, Euro may be sold off against USD as the green back appears more attractive, at least temporarily).
Definition:
“Measures the annualized number of new residential buildings that were sold during the previous month. A rising trend has a positive effect on the nation’s currency because the housing market is a leading gauge for the overall economy. A high level of housing activity signals that the construction industry is healthy and that consumers have the capital to make large investments. More importantly, new housing activity creates an economic ripple effect as home owners buy goods such as appliances and furniture for their homes, and builders buy raw materials and hire more workers to meet demand.”
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