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USD/JPY: Trading the Pending Home Sales

US  Pending Home Sales indicator is released monthly, and provides analysts with important data on the health and direction of the housing sector. The December reading is being  released just one day after US New Home Sales. A higher reading than the market  forecast is bullish for the dollar.

Here are all the details, and 5 possible outcomes for USD/JPY.

Published on Friday at 15:00 GMT.

Indicator Background

US Pending Home  Sales provides analysts and investors with a snapshot of the strength of the US housing market, one of the most important sectors of the economy. As a house is likely to be the largest purchase that a consumer will make, this indicator also is used to measure US consumer spending and confidence.

The November reading jumped 5.2%,  crushing the estimate of  a  0.9% gain.  However, the  forecast for the upcoming release calls for a decline of 0.3%.  Will the  indicator surprise  the markets with another gain  this month?

Sentiments and levels

The new Japanese government, which takes office this week, is  expected to push for further monetary easing, thus adding more pressure on the yen. In the US, the markets remain hopeful that the recent blame game  will not  preclude some agreement being reached.  . A deal would weaken the yen. So, the overall sentiment is bullish on USD/JPY towards this release.

Technical levels, from top to bottom: 86.97, 86.27, 85.50, 84.20, 83.34 and 82.87.

5 Scenarios

  1. Within expectations:-0.6% to 0.0%: In such a case, USD/JPY is likely to rise within range, with  a small chance of breaking higher.
  2. Above expectations:  0.1% to 0.4%: An unexpected higher reading can send USD/JPY above one resistance level.
  3. Well above  expectations: Above 0.4%: A sharp increase could propel the pair above a second resistance line.
  4. Below expectations:  -1.0% to -0.7%: A reading lower than forecast could send USD/JPY below one support level.
  5. Well below  expectations: Below -1.0%.  If the reading is deep into negative territory, the pair could  drop below a second  support level.

For more on the yen, see the USD/JPY forecast.

To follow this event live:   [do action=”calendar-event” eventid=”0136051b-8cff-4984-abde-f0b492f97401″/]

Kenny Fisher

Kenny Fisher

Kenny Fisher - Senior Writer A native of Toronto, Canada, Kenneth worked for seven years in the marketing and trading departments at Bendix, a foreign exchange company in Toronto. Kenneth is also a lawyer, and has extensive experience as an editor and writer.