Aug 26 2008
New Home Sales On Tap
Intra-day gains in the dollar on a better-than-expected U.S. Existing Home Sales report tended to be short lived even though stabilization in the U.S. housing market is seen as critical to ending some of the concerns on the U.S. economy. The dollar finished yesterday’s trading session with mixed results versus the major currencies while staying relatively unchanged against the EUR ultimately closing at 1.4709.
Still, lingering concerns on problems at U.S. mortgage finance companies Fannie Mae and Freddie Mac are keeping housing data at the forefront of investors’ focus for this week. Data on New Nome Sales for July and 2 surveys of Nationwide House Prices are expected to be released today.
Meanwhile, Federal Reserve Chairman Ben Bernanke spoke on financial stability at the Kansas City Fed’s annual Jackson Hole conference. His commentary didn’t necessarily reveal anything new, though he did say that the recent decline in commodity prices, as well as the increased stability of the dollar, has been encouraging. If not reversed, these developments, together with a pace of growth should lead US inflation to moderate later this year. Analysts estimate that longer term prospects for a stronger USD remain intact given that the United States is likely to overcome the problem of slower growth sooner than other nations. The general sentiment towards possibly lower Interest Rates and towards the U.S. economy managing to get out of the global crisis earlier than the other economic areas will probably support the dollar over the next couple of months.
In today’s housing data investors will look for clues on whether the battered property market is indeed stabilizing - which would be a relief for both the economy as well as for hard-hit US financial firms holding mortgage assets.
Later today, the FOMC Meeting Minutes from the Federal Reserve’s August meeting may also be the event to watch. This record of the FOMC’s latest meeting is expected to provide insights into the economic conditions that influenced member’s vote on Interest Rates as well as offering clues on the possible outcome of future votes.
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