US New Home Sales is a leading indicator of activity in the US housing sector. The indicator is released on a monthly basis, and helps analysts track consumer spending. A reading that is higher than expected by the market is bullish for the dollar.
Here are all the details, and 5 possible outcomes for USD/JPY.
Published on Thursday at 14:00 GMT.
Indicator Background
The New Homes Sales Report measures the number of new single-family homes sold the previous month. As a home is likely to be the biggest purchase that a consumer will make, new home sales is an important indication of consumer spending and confidence in the US economy.
The July reading came in at 350 thousand units, well below the market forecast of 372K. The market is expecting an improvement this month, with an estimate of 362K. Will the indicator meet or beat the market forecast?
Sentiments and levels
The weak Japanese GDP, another Japanese trade deficit, and stronger US yields open the door for more gains from the pair’s present levels. While US indicators remain mixed, the improvement in jobs data lowers the chances of QE3, thus aiding the greenback. So, the sentiment is bullish on USD/JPY towards this release.
Technical levels, from top to bottom: 80.20, 80, 79.70, 79.10, 78.80 and 78.
5 Scenarios
- Within expectations: 358K to 366K: In such a case, USD/JPY is likely to move within range, with a small chance of breaking higher.
- Above expectations: 367K to 371K: An unexpected higher reading can push USD/JPY above one resistance line.
- Well above expectations: Above 371K: A sharp increase could push the pair above two or more lines of resistance.
- Below expectations: 353K to 357K: A lower reading than forecast could send USD/JPY below one support level.
- Well below expectations: Below 353K: A sharp decline would signal weakness in the housing sector. In such an outcome, the pair could break two or more support levels.
For more on the yen, see the USD/JPY forecast.
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