Forex Trading TV Video Blog

Existing home sales released yesterday align with expectations at 5.75M and only slightly below the previous value of 5.76M, there was only a slight reaction from the market because the value was already anticipated by investors. Despite a low release of Existing Home Sales and with the difficulties in the US housing market, New Home Sales rose last week substantially from 846K to 870K. We are getting mixed signals from the housing market this month as the New Home Sales release surprised on the upside while there was a fall in the decreasing Housing Starts and Building Permits figures. Today the data for US Consumer Confidence will be released with an expected value of 104.8, which is below the previous value of 112.6, this indicates a degrading of consumer confidence which can influence the USD negatively.

Today’s FOMC Meeting minutes are critical as investors are trying to get hints on a possible interest rate cut by the Fed during the next meeting. Although the general consensus is that an interest rate cut can be expected to occur, the timing is unclear. The Fed might await further reactions to its discount rate cut and the liquidity injections to the financial sectors before cutting the interest rate. In the meanwhile the Fed acknowledged in its August 7th meeting minutes that “risks to growth have increased” and therefore the fragile economic growth along with persistent risk aversion in the markets could favor a rate cut already in September.

As there is a lot of uncertainty involved in the recent market developments, investors should look out for indications in the FOMC Meeting Minutes today to get a hint about future Fed monetary policy and the timing of an interest rate change.

Last week was characterized with a relatively empty US calendar aside from the Durable Goods Orders and New Home Sales which were released on Friday. Both figures beat expectations, boosting the major U.S. stock indexes. The U.S. Durable Goods Orders was released at 5.9%, making it the biggest growth since September, while New Home Sales rose by 2.8%. The strong New Home Sales figures helped to calm market nerves, but despite strong U.S. economic data, the USD fell against most major currencies on Friday. In fact, traders are speculating that losses on sub-prime mortgages are still growing and housing crisis probably won’t be over that soon.

As for the following week, the US calendar will be quite full with major events, starting today with the US Existing Home Sales. The expectations for the Home Sales release are currently standing at 5.75M, the same as the last month’, and would probably not generate too much price movement if it would be released inline with expectations. Tomorrow, the FOMC Meeting Minutes will expose the votes cast at the previous meeting and will probably clarify Fed’s intentions regarding the future interest rate’s “fate”. After the announcement we may see the USD begin to find a clearer path.

Although the better-than-expected previous week’s data shed some positive light on the greenback, it’s still too early to get excited by positive data. This week should provide a clearer picture of what impact the credit crisis is likely to have on U.S. and global growth.