WikiFX: How Will U.S. Home Sales Affect Forex Market?

U.S. home sales data had just been released. The existing home sales shows a positive trend, reaching 5.42 million which is slightly higher than the estimated 5.39 million; on the other hand, new home sales turns out to be 635 thousand, which is lower than the forecast of 649 thousand.

Existing home sales measures the annualized number of existing residential buildings that were sold during the previous month, while new home sales measures the annualized number of new single-family homes that were sold during the previous month. The figures help measure the strength of the US housing market while serving as key indicators of the countrys overall economy. There are also implications on the market trend of US dollars: an actual data higher than estimation points to uprising trend of US dollar, while a figure lower than estimation suggests the opposite.

More specifically, the housing sales are closely linked with mortgage rates. With the current mortgage rate down in the US, housing is becoming more affordable and attracts more buyers into the market, indicating a rising trend in sales that will be very likely to exceed market predictions. New home sales show that low mortgage rate has nudged more buyers into the market than expected. As Lawrence Yun, Chief Economist of NAR(National Association of REALTORS), noted, “The mortgage rate matters significantly for the consumers as well as the countrys economic outlook. Buying a house is an important long-term decision, and the current mortgage rate or even lower rate in the future may not boost sales significantly, unless buyers eventually regain their confidence.” The latest existing home sales and new home sales shows the falling mortgage rate has led to steady purchase of homes and contributes to the upward momentum in U.S. housing market.

Early this month, the Federal Reserve cut interest rate by 25 basis points due to concerns of a global economic slowdown and risk-control assessments, triggering significant volatility in the global financial market. Federal Reserve Chair Jerome H. Powell mentioned during his speech last Friday that although the US economy has done well overall, it still faces many challenges, and the Reserve will “take actions as appropriate” to keep the current economic growth on track. The market is holding out for US dollar after Powells talk, and the price of interest rate futures has gone up again, though with reduced pace.

All these changes will affect the forex market. The outlook for US dollar -centered trading remains positive. As the trade war between China and the US continues, the forex market will also be influenced by the statistics of the worlds 2 largest economies, while safe-haven currencies like Swiss Franc and Japanese Yen will also respond to market fluctuations.

The economic statistics reveal much about the country‘s overall economy, which has a great impact on the forex market. US economic statistics usually draw the most attention of all. Considering the impact of such economic data on the forex market, WikiFX offers investors explanation and analysis of the major economic statistics before or after they’re released, in order to help investors make a better decision in an ever-changing forex market. Stay tuned as we present you more forex and financial updates.