New home sales in the United States rose more than expected in July, official data showed on Tuesday. According to the Department of Commerce, new home sales increased 12.4% to a seasonally adjusted annual rate of 654,000 in the seventh month of the year, reaching the highest level since October 2007. Meanwhile, the preceding month's reading was revised down to 582,000 from the originally reported 592,000 units. Market analysts penciled in a slight deceleration to 575,000 units in the reported month. July's surge probably exaggerates the housing market strength, as new single-family home sales are extremely volatile month-to-month; still, they were 31.3% higher than a year ago. The data also showed that new single family home sales jumped 40.0% in the American Northeast, as well as grew 1.2% in the Midwest region. Sales in the South rose 18.1% to their best level since July 2007, whereas the West region remained flat last month.
Furthermore, inventories of new homes for sale dropped 2.9% to 233,000 units in July, the lowest level since November 2015. The median price of a new single-family home fell 0.5% year-over-year to $294,600. The US Dollar rose slightly after the release, trading at 1.1326 against the Euro, 100.11 against the Japanese Yen and 1.3186 against the British Pound.
US Existing Home Sales and Housing Price Index
Wednesday is also rather quiet in terms of fundamental data releases, with the only relevant one being the US Housing Price Index. It provides an estimated value of housing market conditions and is an important indicator as the housing market is considered as a sensitive factor to the US economy. Another possible release of relevance could be the US Existing Home Sales, which provide an estimated value of housing market conditions. It generates some volatility for the USD.USD/JPY on the edge of falling under 100.00
The Greenback managed to remain above the 100.00 major level on Tuesday, ultimately closing with an eight-pip loss. The US Dollar is expected to be exposed to more weakness today, as price once again opened just under the weekly PP, where supply is strong. However, the 100.00 mark remains a tough support, which will be difficult to pierce. Provided there is sufficient impetus, the USD/JPY currency pair could fall towards 98.75, where the weekly S2, the monthly S1 and the Bollinger band form an even stronger demand area. Technical indicators are bolstering the possibility of the negative outcome today, as they retain bearish signals.Daily chart
Both bullish market sentiment and the share of buy orders remain unchanged, taking up 67% and 54% of the market, respectively.
Sentiment at Saxo Bank is virtually the same - 71% of the Denmark-based clients are currently holding long positions. Traders at OANDA are even more confident in Dollar's appreciation - as many as 73% of open positions are long. Using the data as a contrarian indicator, the sentiment implies a cheaper Dollar. There is little room for new buyers to enter the market, and if the bulls start closing positions on profit-taking, this could create a strong selling pressure.
Spreads (avg, pip) / Trading volume / Volatility
Slightly more than a half expect the exchange rate to fall below 105.00 yen