With the first time Home Buyer’s Credit coming to an end, March and April will be the final stretches for U.S. homeowners to claim that credit. Therefore, we could see a stronger than expected release this month (March release). Here is the forecast:
10:00am NY Time New Home Sales Forecast 326K Previous 308K
ACTION: USD/JPY BUY 400K SELL 260K
Our plan to trade this release is to use a tradable deviation of 70K, and if the release is lower, it would strengthen risk aversion sentiment and we should look to SELL USD/JPY; if the number is higher, it would fuel risk appetite sentiment, we may see a rally in USD/JPY and possibly add more 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 be absolutely sure before we take a SELL on 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).
If we get an inline with expectation release, expect to see market resume pre-release trends.
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.”
Related posts:
- Forex Trading Plan For US New Home Sales 08/25/10
- US New Home Sales 03/24/2010
- Forex News Trading Plan For US New Home Sales 11/24/10
- US New Home Sales Forex Trading Plan 10/27/10
- Forex Strategy For US New Home Sales 05/26/10
- US New Home Sales 01/27/10
- Forex News Trading US New Home Sales m/m 04/25/11
- Trading Strategy For US New Home Sales 06/23/10
- US New Home Sales 02/24/2010
- Forex News Trading US New Home Sales 02/24/11
{ 4 comments… read them below or add one }
Hi Henry,
I notice you use the USD/JPY.
Do you think the Dollar Index futures would make a good substitute? Note however that the Dollar index has a large portion of the weighting with the Euro in it.
Or in your experience, the USD/JPY is sufficient to trade us-related news items and that it reacts accordingly and consistently?
thanks.
If your broker allows you to trade USDX then its the same as USD/JPY, although I use USD/JPY to gauge market conditions and based on the reactions of USD/JPY I would look to trade GBP/JPY or EUR/JPY instead.
Hi Henry,
Which do you recommend; RanSquawk or Tradethenews??
Ransquawk does not have Asian coverage. Tradethenews has 24 hour coverage. In this day and age, especially for news traders, having complete coverage is essential.
Henry