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The  New Home Sales Report is released towards the end of every month.  A  leading economic indicator, it is considered by analysts as an  important measure of consumer spending.  A higher reading than the market forecast is bullish for the dollar.

Here are all the details, and 5 possible outcomes for JPY/USD.

Published on Thursday at 15:00 GMT.

Indicator Background

The  New Homes Sales Report provides analysts and  traders with important information about  activity in the  housing sector. As a  new home  is likely to be the largest purchase that a consumer will make, this indicator  helps measure  consumer spending, which is critical  for economic growth.

The  December reading    came in at  315K, which  was what the markets had predicted.  The positive news is that this is the fourth consecutive reading where the indicator posted an increase, confirming that the US economy is showing improvement. The January forecast calls for a modest increase, up to 321K. Will the indicator prove the markets right, and continue the upwards trend?

Sentiments and levels

After  dropping below the 77 level,  USD/JPY  is up this week, and  look for the  yen  to  continue to weaken. US economic indicators continue to signal improvement,  and the dollar may resume its recent rallies against most major currencies. So, the overall sentiment is  bullish on USD/JPY towards this release.

Technical levels, from top to bottom: 80.25, 80, 79.50, 78.30, 77.50, 77, and 76.50.

 

5 Scenarios    

Within expectations:  315K to 327K: In such a case, the USD/JPY is likely to move within range, with a small chance of breaking higher.

Above expectations:  328K to  334K: An unexpected reading into positive territory can send USD/JPY  above one  resistance level.

Well above expectations: Above 334K: A sharp increase in housing sales could push the pair  above  two or more  resistance lines.

Below expectations: 308K to 314K: A reading lower than forecast could send USD/JPY  below one  support level.

Well below expectations: Below 308K: A very poor reading could push the pair below two or more support  levels.

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

Expert score

5

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