December 23, 2009
Supported by the strong reading on the existing home sales report, the USD turned up the heat against the majors currencies yesterday... Except versus the CAD, that one’s tough and refuses to melt! Is this more evidence that currency traders are returning to watching fundamentals than risk sentiment? It sure looks like it.
The existing home sales report for November leapt to 6.54 million (annualized number) from 6.09 million in October. The forecast was for existing home sales to increase to 6.24 million only. The surge in sales was apparently caused by the rumor that the tax credit given to first-time home buyers could end soon. As I keep saying in my previous posts, as long as strong US economic data keeps on printing, the USD will be the prime choice of currency traders.
The final GDP, however, wasn’t as rosy. The initial reading of 2.8% growth was revised down slightly to 2.2%, causing dollar buying to ease up a bit.
The US has a lot on its economic cupboard today.
First up will be the personal spending report for November at 1:30 pm GMT. The expectation is that consumer spending increased 0.6%, slightly lower than the 0.7% growth seen the month before. Shortly after, at 2:55 pm GMT, the revisions on the UoM consumer sentiment survey previously released will print. The initial reading of 73.4 is predicted to be revised up to 74.0. Lastly, at 3:00 pm GMT, the report on new home sales for November will be released. The consensus is an annualized number of 442,000, up from October’s 430,000. Given the surprisingly strong existing home sales reading, we could see the new home sales report come in higher-than-forecast too.
Okay, that’s it for today. Be sure to watch these data as better-than-expected readings could push the dollar higher again, especially since currency traders seem to have returned to watching fundamentals than risk sentiment.
"The only cable I watch is the pound baby."