Monday, June 20, 2011

US Existing Home Sales - May 2011 Data Release - 06/21/11

 
US Existing Home Sales is expected to rise slightly from the previous month as current foreclosure rate is still remaining resiliently high. Here´s the forecast:

10:00am Existing Home Sales Forecast 4.80M Previous 5.05M
ACTION: USDJPY BUY 5.20M / SELL 4.40M

The Trade Plan : Because the Housing sector is one of the most focused news events out of the US, this release will certainly cause some volatility in the market, especially if our tradable figures (+/- 400K) were hit. With the focus of the nation, and of the world, on the status of U.S. housing sector, this release may bring about a strong sentiment of risk appetite/aversion if our BUY/SELL trigger is hit...

If our buy tradable deviation is hit, or 5.20M figure is released, we should look to SELL EURUSD after the release. If our buy tradable deviation is hit, or 4.40M figure is released, we should look to BUY EURUSD as USD should be sold off again.

We´ll be looking to trade this release using the after-news retracement trading method. We´ll wait for the release, wait for market reaction, and wait for retracement before jumping in.

The Market

The U.S. housing market remains under pressure however recent mortgage applications jumped to the highest levels in 3 months after Memorial Day, reflecting consumer demand for housing in the persistent low financing rate environment. We could see a slightly better than expected release, but probably not enough to really surprise the market…

Additional Thoughts : This release is scheduled at 10:00am US EST time, usually it is the last high impact news for the NY session, so we may see more volatile market regardless of the release figure because many traders may just be waiting for this news to be out of the way first.

Pre-news Considerations : There is no pre-news opportunity for this release.

Definition: "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."

Thanks,