Risk Assets Higher on Soft US Home Sales Ahead of the FOMC

Risk sentiment has improved suddenly as commodity dollars jump higher, and the softer US home sales for June are helping too

Skerdian Meta•Wednesday, July 26, 2023•2 min read

US existing home sales are expected to slow in June

Earlier today we were seeing a retreat in risk assets during the Asian and European sessions on fears of a hawkish FED, but there has been a noticeable reversal on the commodity dollars, as well as crude Oil which have made some decent gains in the last two hours. Initially, they experienced a decline in value earlier in the session as the sentiment was still negative, but have since made a strong recovery since then. The reason for this sudden turnaround is not entirely clear, but it could be attributed to the improvement in US equities and Oil prices to some extent.

Today is the FED’s meeting day which will be held in the evening, and as a result, there may be increased market volatility due to potential announcements or statements from the Federal Reserve regarding their monetary policy. The reversal in the Canadian dollar’s and Australian dollar’s value might indicate that traders are speculating on a less hawkish stance from the Federal Reserve in their announcements today.

Another possible reason for the change could be related to Oil-settlement flows in CAD, which typically occurs around this time of the month. Besides that, the US new home sales for June missed expectations and the previous month was revised lower as well, which is helping the cause for risk assets. Overall, it’s a day of anticipation and uncertainty, with various factors contributing to the fluctuations in the currency markets and stocks.

US June 2023 New Home Sales Report from the Census Bureau

June new home sales 697K vs 725K expected
Prior was 763K (revised to 715K)
Single family sales -2.5% vs +12.2% prior
Median sale price $415.4K vs $416.3K a year ago
Supply months 7.4 vs 6.7 months prior

Earlier today, the US reported June building permits at 1.441m vs 1.440m prior. This is a disappointing number coupled with a large revision lower. Home builders have been optimistic in reports so far this year but perhaps the latest data was over-cooked.

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Skerdian Meta

Lead Analyst

Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.