The existing home sales figure, published on April 20th at 14:00 GMT, is the widest measure for the American housing sector. The publication shakes the dollar across the board, with USD/JPY being the most sensitive barometer. Here’s what’s expecting us, with 5 possible outcomes.
The US manufacturing sector is growing. So is the services sector. But the housing sector, that underwent a boom and a bust, is still on the ropes. Government efforts to stimulate this sector have provided only temporary remedy, as the sector found itself in an ongoing “mortgage mess”.
As most sales of homes are of existing homes, this indicator leads the pack for this sector in terms of market impact. More sales mean more economic activity throughout the country. Dollar/yen is usually the most sensitive currency pair and tends to move more precisely to this type of release, more than EUR/USD or GBP/USD.
In the past months we’ve seen some improvement in sales. After reaching the rock bottom annual pace of 3.84 million in July, the pace has picked up, moving two steps forward and one step backwards each time. The most recent release has shown a significant drop from 5.4 to 4.88 million. Expectations are for a rise above the psychological level of 5 million this time, to around 5.05 million.
Sentiment and Technical Levels
After the big coordinated intervention to weaken the yen, the pair went all the way up to 85.50, but began sliding from there. The anti-dollar sentiment is still strong – slightly bearish on USD/JPY.
Levels to watch, from top to bottom: 85.93, 85.50, 84.50, 84, 83.40, 82.87, 82, 80.90 and 80.40.
- Within expectations: 5 to 5.20 million – USD/JPY shakes and can slide lower.
- Above expectations: 5.21 to 5.40 million (the peak of January) – USD/JPY manages to edge higher, with a small chance of breaking above a resistance level.
- Well above expectations: 5.41 and higher: USD/JPY rises with a good chance of breaking above technical resistance.
- Below expectations: 4.70 to 4.99 million (under the psychological barrier) – USD/JPY falls, with a good chance of breaking below support.
- Well below expectations: 4.69 and lower. USD/JPY drops with an excellent chance of losing support.
For more technical levels and analysis, see the USD/JPY forecast.Get the 5 most predictable currency pairs