The amount of pending home sales rose by 5.2% in October. Early expectations stood on a rise of 0.9% in this usually volatile indicator. Last month’s figure was revised from a rise of 0.3% to a rise of 0.4% – very insignificant. There are some cases were an excellent recent figure is actually based on a significant downwards revision. This is not one of those.
EUR/USD traded just under 1.30 prior to the publication but rose towards this line. It is now trading at 1.3005. Another false break? Or is it for real this time? The positive US data could help the pair push higher on “risk appetite”.
Update: Less optimism about the cliff sends EUR/USD lower now.
EUR/USD climbed in the past 24 hours on optimism towards a resolution of the fiscal cliff. It made a significant comeback from 1.2912 to almost 1.30. There is a good reason why it stalled here: EUR/USD is at key resistance confluence, as the charts show.
Yesterday, the US reported disappointing new home sales: only 368K. This was significantly lower than 387K that was expected. In addition, the previous month’s number was also revised to the downside: from 389K to 369K.
Sales of new homes trigger significant economic activity: they turn into jobs for building the homes, building the infrastructure around the homes and also related public services.
On the other hand, home prices are moving higher: this was shown in Case Shiller’s index that printed a year over year rise of 3%, and also in the official FHFA HPI which gained.
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