Pending Home Sales Rebound But...

Last updated 2/3/2009 10:13 AM ET (GMT -5) 0 Comments - Add your comment

Forex Trading involves high risks, with the potential for substantial losses and is not suitable for all persons. Past performance is not necessarily indicative of future results.

Kathy Lien

Director of Currency Research, GFT

After falling for 3 straight months, we have finally seen a recovery in pending home sales. Falling home prices and lower interest rates have boosted the number of Americans signing contracts to purchase homes by 6.3 percent in the month of December. Sales in the Northeast and West continued to decline, but bargain hunters are sweeping in to buy homes in the Midwest and South, where prices have declined the most over the past few months. Unfortunately the rebound in pending home sales and manufacturing ISM reflect only mild improvements for a depressed economy.

Stimulus packages Lift Currencies

However stimulus packages are causing alot of cheer in the currency market today. The Australian dollar is up more than 2 percent after the government announced a package worth up to 4% of GDP or AUD 42 billion. The central bank also cut interest rates to a record low of 3.25 percent. The Japanese Yen received some support after the Bank of Japan announced that they will be purchasing JPY 1 trillion of securities from banks.

US investors are waiting for their own stimulus package but that may not be delivered for another few weeks. The full Senate is set to vote tomorrow on their version of the package and if it diverges significantly from the House's version and it will, the package will delayed even further. A plan will not be on President Obama's desk to sign until mid Feb at the earliest. Therefore any recovery in risk aversion today should be fleeting especially ahead of non-farm payrolls on Friday.

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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.