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No Bounce For Housing But USD/JPY Shrugs Off the News

Last updated 4/23/2009 10:32 AM ET (GMT -5) 0 Comments - Add your comment

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Boris Schlossberg

Director of Currency Research, GFT

March Existing Home Sales declined significantly dropping to a 4.57M versus expectations of 4.65M annual run rate.  The decline was materially worse than the 4.71M figure for the month of February. Median price of a home fell by 12% from the year prior to $175,000. The news put a damper on equities and risk appetite as investors were anticipating a much more benign decline.

Today’s data indicates that the US housing market remains in a deep slump with little evidence of any bottoming out. The inventory of homes rose in March to 9.8 months from 9.7 months  the period prior suggesting that the overhang of supply in housing sector is likely to  keep prices depressed for the foreseeable future.

The dollar dropped against the yen in the aftermath of the release, but USD/JPY quickly stabilized at 98.00. Although the news form the housing market remains grim, investors have discounted most of the downside surprises. With existing home selling at a only 60% of the peak pace of 2005, the sector has become far less important to the overall US economy.

Nevertheless, the  news on the housing front only underscores the collapse of consumer demand in the US economy and indicates that any improvement  in data over the past several weeks has simply  been a measure of slower contraction rather than any absolute pick up in economic activity.

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About The Author

Boris Schlossberg began his Wall Street trading career more than 20 years ago at Drexel Burhnam Lambert. There, he traded nearly every type of financial product on the market in the U.S., from equities and options to stock index futures and foreign exchange. His innate ability to analyze market information and use it to trade has helped him become an industry-recognized, “go to” trading professional.

These days, whenever the markets move, many organizations turn to Schlossberg for his take on the situation. He is a weekly contributor to CNBC's Squawk Box and a regular commentator for Bloomberg radio and television. His daily currency research is widely quoted by Reuters, Dow Jones and Agence France Presse newswires and appears in numerous newspapers worldwide. Schlossberg has written for publications like SFO magazine, Active Trader and Technical Analysis of Stocks and Commodities. He is also the author of Technical Analysis of the Currency Market and the co-author of Millionaire Traders: How Everyday People Are Beating Wall Street at Its Own Game with Kathy Lien. He joined GFT in 2008.