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Existing Home Sales Proves Good for the Dollar

Last updated 10/23/2009 10:31 AM ET (GMT -5) 3 Comments

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Kathy Lien

Director of Currency Research, GFT

Existing Home Sales far exceeded expectations thanks to recent stabilization in the employment market with the added benefit of mortgage rates holding under the 5% mark. Home sales were boosted 9.4% in the month of September, far outweighing market estimates of an only 5.5% increase. The annual rate of home sales have increased to 5.57 million from the 5.10 million reported in the prior month. Furthermore, inventories of existing homes for sale dropped by 7.5%, a positive sign that sellers may have to rebuild their stocks. Overall improvement in the economic outlook has led a surge of new buyers to take advantage of the combination of low prices and low rates. However, an ominous force does exist in the fact that the $8000 rebate award to these buyers will no longer be provided come next month. September’s strong figure may just indicate a buying frenzy to use the offer while it lasts. The dollar was a significant beneficiary of the report and added to earlier gains, with particularly strong buying flowing into USD/JPY which is rallying for the fourth straight day.

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Comments (3)

aloen

October 23, 2009 at 12:06 PM ET

Hi Kathy, Could you help me to understand why some times good home sales data drive dollar higher and sometimes drive dollar lower, it's very hard to predict.
Thanks

yasir

October 23, 2009 at 01:12 PM ET

Hi Kathy, will you pls tell me some time good home sales data drive dollar lower and like today it drives dollar higher,can you pls tell me how how should we deal with this data.
Thanks

FXDragon

October 23, 2009 at 03:08 PM ET

Hello,
If fed started raising rates, would you expect equitiies to pull back?

Thank you,

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About The Author

Kathy Lien began her FX trading career 10 years ago at J.P. Morgan Chase. After graduating New York University’s Leonard Stern School of Business at the age of 18, Kathy joined the bank's interbank FX trading desk and eventually moved to the cross markets proprietary trading desk. In the interbank market, her ability to create solid fundamental and technical analysis from the myriad of information on the market helped her trade forex spot and options. Her experience eventually led her to be chief strategist at Daily FX where she worked until she joined GFT in 2008.

With her knowledge of forex, as well as her experience trading other products, such as interest rate derivates, bonds, equities, and futures, Lien has built a reputation as an international currency analyst. She is frequently quoted on CNBC, Bloomberg, Fox Business and Reuters. Lien has also written for publications like Active Trader, Futures, and SFO magazine. She is the author of the newly updated Day Trading the Currency Market: Technical and Fundamental Strategies to Profit from Market Moves, and the co-author of Millionaire Traders: How Everyday People Are Beating Wall Street at Its Own Game with Boris Schlossberg.

To buy Kathy’s newly updated Day Trading and Swing Trading the Currency Market: Technical and Fundamental Strategies to Profit from Market Moves, click here.