US housing starts dropped more than expected last month, official figures revealed on Tuesday. According to the US Department of Commerce, housing starts declined 5.8% to a seasonally adjusted annual pace of 1.14 million units in August, following the preceding month's 1.21 million-unit rate and falling behind the 1.17 million-unit pace market forecast. Starts of single family houses declined 6.0% to a 722,000 unit rate in August, the lowest level since October of 2015, whereas housing starts for the volatile multi-family segment dropped 5.4% to a 420,000 unit pace.
In the meantime, building permits plunged 0.4% in August to a seasonally adjusted rate of 1.14 million units as approvals in the volatile multi-family segment fell 7.2% to a 402,000 unit-pace, whereas permits for single–family homes jumped 3.7% to a 737,000 unit-rate last month. Market analysts expected permits for future construction to hit 1.17 million units in the reported month. In regional terms, single-family new house construction building permits fell in both the Northeast and South 13.8% and 13.1%, respectively, but increased in the West and Midwest. After the release, the US Dollar fell slightly, trading at 1.1182 against the Euro, 1.2967 against the British Pound and 101.83 against the Japanese Yen.
US Federal Funds Rate and FOMC Statement
The Bank of Japan announced its new policy changes during its meeting today, which finally managed to bring the Japanese Yen slightly lower. Nevertheless, all attention today falls on the Fed's Interest Rate Decision and its Monetary Policy Statement. With a pre-set regularity, a nation's Central Bank has an economic policy meeting, in which board members took different measures, the most relevant one, being the interest rate that it will charge on loans and advances to commercial banks. In the US, the Board of Governors of the Federal Reserve meets at intervals of five to eight weeks, in which they announce their latest decisions. A rate cut, on the other hand, is seen as a sign of economic and inflationary woes and, therefore, tends to weaken the local currency. If rates remain unchanged, attention turns to the tone of the FOMC statement, and whether the tone is hawkish, or dovish over future developments or inflation. This is the case today, as rates are largely forecasted to remain unchanged during today's meeting.USD/JPY likely to extend stagnation
The American Dollar closed at the lowest level in three weeks yesterday, but was still unable to reach the immediate support. Ahead of the BoJ meeting today the USD/JPY currency pair kept edging lower, but the Yen experienced a rather sharp decline once the BoJ announced its new policy framework, aimed to keep inflation rising. The rally, however, was limited by the one-year down-trend, which is also expected to remain intact today. The pair is expected to erase most of its post-BoJ gains, closing around the 102.00 mark. Meanwhile, technical studies retain mixed signals, also suggesting that no dramatic development is due.Daily chart
Traders' sentiment remains moderately bullish, now at 61%, while the share of buy orders barely changed itself, having risen from 51 to 54%.
There has been an increase in the number of long positions at other brokers as well. Right now 66% of OANDA clients are bulls, up from 64% recorded on Tuesday. Saxo Bank clients, however, are less bullish than on Tuesday, being that the portion of longs declined from 67 to 62%.
Spreads (avg, pip) / Trading volume / Volatility
Traders are becoming increasingly bullish the Dollar