The number of existing home sales leaped by over 15%. CB Consumer Confidence jumped very nicely. These positive figures help the US dollar.
The text of Bernanke’s doesn’t provide big surprises, and as expected, it is not hawkish like the FOMC meeting minutes. Bernanke said that QE will continue until substantial labor market gains are seen. EUR/USD is lower.
Here are the highlights of the economic data and Bernanke’s text:
- Existing home sales leaped by over 15.6% from 378K to 437K, far above expectations for 381K. This is an important gauge of the American economy.
- CB Consumer Confidence also jumped from 58.3 to 69.6, considerably above 60.8 that was expected. This isn’t that important, but the leap is certainly impressive.
- Case Shiller HPI showed an annual rise of 6.8%, in line with expectations of 6.7% and better than 5.4% recorded in the previous month.
- The Richmond Manufacturing Index came out better than expected, rising from -12 to +6, much better than -4 that was predicted.
- Federal Reserve Chairman Ben Bernanke also said that the benefits of easing outweigh the costs and the risk at this point.
- The lower rates helps the housing market and economic growth has picked up.
- More QE could erode confidence in exit ability, but the Fed has tools to tighten.
EUR/USD is reacting to the positive economic figures rather to the relative (and expected) dovish of Bernanke: the pair is falling from 1.31, in the latest battle over this figure. At 1.3070, there is still a safe distance until the day’s lows at 1.3018, as it extended the Italian crash.
The dollar also rose against the Japanese yen in the immediate aftermath of all this data, but could not sustain the gains. The pair is finding it hard to recover from the big post-Italian elections plunge.