USD/JPY: Trading the US New Home Sales Oct 2013

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US New Home Sales indicator is released monthly, and provides analysts with important data the health and direction of the housing sector. A higher reading than the market prediction 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

US New Home Sales provides analysts and investors with a snapshot of the strength of the US housing market, one of the most important sectors of the economy. As a house is likely to be the largest purchase that a consumer will make, this indicator also is used to measure US consumer spending and confidence.

The August release rose to 421 thousand, which was very close to the estimate of 422 thousand. The markets are expecting an improvement for September, with a forecast of 427K.

Sentiments and levels

The yen has posted strong gains following the weak Non-Farm Payrolls earlier this week, and the dollar continues to remain under broad pressure. Meanwhile, Japanese inflation numbers are pointing upwards, and the yen could get a boost from respectable inflation numbers this week. So, the overall sentiment is bearish on USD/JPY towards this release.

Technical levels, from top to bottom: 100.00, 98.90, 97.80, 96.59, 95.00 and 93.79.

5 Scenarios

  1. Within expectations: 423K to 431K: In such a case, USD/JPY is likely to rise within range, with a small chance of breaking higher.
  2. Above expectations: 432K to 437K: An unexpected higher reading can send USD/JPY above one resistance level.
  3. Well above expectations: Above 437K: A sharp increase could propel the pair above a second resistance line.
  4. Below expectations: 417K to 422K: A reading lower than forecast could send USD/JPY below one support level.
  5. Well below expectations: Below 417K. In this outcome, the pair could break past a second support level.

For more on the yen, see the USD/JPY forecast.

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About Author

Kenny Fisher - Senior Writer A native of Toronto, Canada, Kenneth worked for seven years in the marketing and trading departments at Bendix, a foreign exchange company in Toronto. Kenneth is also a lawyer, and has extensive experience as an editor and writer.

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