Search ForexCrunch

The New Home Sales Report, published monthly,  is a leading indicator of housing activity. As a new home  is likely to be the largest purchase that a consumer will make, this indicator provides important data about the mood of consumers and the health of the economy. A higher reading than that expected by the market is bullish for the dollar.

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

Published on  Friday at 15:00 GMT.

Indicator Background

The  New Homes Sales Report measures the number of new single-family homes sold the previous month. An increase in home sales sends a strong signal of consumer spending and confidence in the economy.

The September reading came in at 295K, practically identical to the forecast of 296K. The forecast for October is for a slight increase to 302K.

Sentiments and levels

The Greek debt crisis is being actively discussed at the EU Summit, but no significant progress has been reported. Another source of concern is lower economic confidence in Germany, the largest and most important economy in the Euro Zone. So, the overall sentiment is bearish on EUR/USD towards this release.

Technical levels, from top to bottom: 1.39, 1.3838, 1.38, 1.3725, 1.3650, 1.3550 and 1.3450.

5 Scenarios    

  1. Within expectations: 299K to 305K: In such a case, EUR/USD is likely to move within range, with a small chance of breaking higher.
  2. Above expectations: 306K to 309K: An unexpected higher reading can push EUR/USD below one support level.
  3. Well above expectations: Above 309K: A sharp increase could push the pair below a second support line or more.
  4. Below expectations: 295K to 298K: A reading lower than forecast could send EUR/USD above one resistance level.
  5. Well below expectations: Below 295K: A sharp decline would signal further weakness in the US economy. In such an outcome, the pair would likely break two or more resistance levels.

For more on the pound, see the GBP/USD forecast.