THE TAKEAWAY: [US New Home Sales rose in January to the highest level since July 2008; February Consumer Confidence beat forecast ] > [ Americans adjusted to new payroll tax; housing market continues recovering ] > [USD/JPY Strengthened]
Sales of new homes in US surged in January to the highest level since July 2008, indicating that the demand for homes purchases continue increasing. According to a report released by the Commerce Department today, the sales rose 15.6 percent to 437,000 following a revised decline of 3.8 percent in previous month. The consensus forecast of economist in a survey polled by Bloomberg News had called for an increase of 3.0 percent to 380,000. The near-record low mortgage rates and a stronger job market help to attract more buyers and improve the demand for new home sales.
Another report today showed that confidence among U.S. consumers increase more than expected in February. The confidence index climbed to 69.6 following a revised 58.4 in January. It was the first improvement in four months and the biggest since November 2011. The economist surveyed by Bloomberg had projected a median forecast of 62.0. Positive readings signal that Americans have adjusted to a higher payroll tax and gained confidence as housing market continues picking up. In addition, more jobs are available on labor markets and thus households can keep their income. Rising property values also add wealth to home owners, helping to spur faith on their future spending.
USDJPY 1-minute Chart: February 26, 2013
Chart created using Market Scope – Prepared by Renee Mu
In the minutes following the reports released, the U.S. dollar soared against the major currencies, rallying 27 bps versus Japanese Yen to 92.34. At the time of this report written, the USD/JPY was trading at 91.77.
--- Written by Renee Mu DailyFX Research
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.
Learn forex trading with a free practice account and trading charts from FXCM.