The annualized number of existing home sales in the US in June disappointed with a drop to 5.08 million. It was expected to rise from 5.14 (revised down from 5.18) to 5.27. So, sales dropped instead of rising and the dollar follows.
The dollar was generally on the retreat earlier in the day, with EUR/USD challenging the 1.32 line, USD/JPY falling below 100 and GBP/USD climbing above 1.53. After the publication, EUR/USD peeks above 1.32 and USD/JPY is already at 99.33 and GBP/USD extends the rally to 1.5375.
Also the commodity currencies, AUD, NZD and CAD are gaining against the dollar. While the disappointment isn’t that huge, the dollar is sold off. It seems that markets needed an excuse for the sell-off.
Most transactions in the real estate market are of existing (second hand) homes. On the other hand, sales of new homes produce a wider range of economic activity. New home sales will be released on Wednesday. Last week’s housing starts and building permits both disappointed with significant falls.
The Fed was certainly encouraged by the improvement in the housing sector, and attributed part of it to its own moves: QE lowers long term interest rates. However, the focus is now on jobs.
Further reading: Gold price to turn around?
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