10:00am (NY Time) US Existing Home Sales Forecast 4.82M Previous 4.77M
ACTION: USD/JPY, USD/CHF BUY 5.22M SELL 4.42M
Measures the annualized number of existing residential buildings that were sold during the previous month. A rising trend has a positive effect on the nation’s currency because large purchases tend to be made by consumers that are optimistic and confident in their financial position. The sale of a home also triggers commissions for real estate agents, and often home owners will purchase goods such as appliances and furniture shortly after purchasing a home. Traders watch this report closely as it’s the month’s first demand-side housing indicator to be released.
Since US news events is generally a risk sentiment event, better than expected number will usually trigger risk appetite sentiment where we’d see weakness in safe haven currencies such as USD and JPY; in the event that risk aversion sentiment is trigger by a worse than expected release, USD and JPY may gain strength as investors flood to the bond market seeking the shelter of the security provided by the US Treasuries, which is considered as the most secured instrument in the world as it is backed by the government of the United States. Therefore, my recommendation is actually against the risk sentiment, and the market will battle it out at the time of the release, so it is always safer to wait for retracement before jumping into the market immediately after the news.
UPDATE: Existing Home Sales trade was a bust as the release number came out just a tad better than expected. However, there were rumors of BOJ (Bank of Japan) telling investors that it is “safe” to buy USD/JPY at the 92.00 level as a surge in demand for the USD/JPY pair… As a result, market moved sharply upwards with risk appetite sentiment during the NY session, ignoring this release. Watch the video for more information.