THE TAKEAWAY: [US Pending Home Sales in December declined for the first time since August ] > [The recovery of U.S. housing market is uneven] > [USD/JPY Bearish]
The number of signed contracts to purchase previously owned homes in the U.S. dropped by 4.3 percent in December from a month earlier, the first time since August. The National Association of Realtors reported today that its pending home sales index, a forward-looking indicator based on contract signings, fell to 101.7, following a 1.6 percent rise in November that was downwardly revised from 1.7 percent initially reported.
The median forecast of economists surveyed by Bloomberg News had projected no change in the Index. On a yearly basis, pending home sales rose 4.9 percent in November, falling short of the expectation for an 11.5 percent increase.
Given improved job market condition and cheap borrowing costs, the demand for housing in U.S. is expected to increase. Yet the home sales were held back by the limited supply of real estates, with an unexpected drop in existing home sales in another report released last week.
USD/JPY 1-minute Chart: January 28, 2013
Chart created using Market Scope – Prepared by Renee Mu
The U.S. dollar weakened slightly against the Japanese yen following data release. As can be seen from the one-minute chart above, the USD/JPY pair dropped to 90.62 yen in the minute preceding the report but then saw retracement back to previous level. At the time this report was written, the USD/JPY pair was trading at 90.75 yen.
--- Written by Renee Mu DailyFX Research