Forex Signals Brief November 28: Will Consumer Confidence Weaken Further in US?
Yesterday most of the markets were pretty quiet, apart from the bonds market, which saw a sharp bearish reversal for US treasury yields. Overall, the USD remained the weakest of the major currencies at the end of the day once again, while the JPY was the strongest of the major currencies. Lower yields aided the USD’s weakening yesterday. Looking at the yield curve, us 10-year Treasury yields fell below 4.40%.
The economic data was limited to New Home Sales in the United States. However, that data point revealed weakness, echoing the previous week’s existing house sales and adding further to the weak data we have seen recently. Year-on-Year (YoY), new-home sales units totaled 0.679 million, far less than the 0.723 million projections and far less than the 0.719 million from last month, which was also reduced considerably lower from 0.759M. Mortgage rates have dropped, which may lead to a rebound next month (rates were near 8% for much of the last month).
On top of the decline in home sales, the supply of properties increased, causing prices to fall. The supply of new homes increased to 7.8 million last month, up from 7.2 months in the previous month, but the median sales price fell to $409,300, a -17.6% decrease from the same period a year ago, which shows that buyers are not buying new homes for now as interest rates remain at record levels, despite falling prices.
Today starts with the retail sales report from Australia, which is expected to show a 0.1% increase last month. That is quite a slowdown from the 0.9% increase we saw in September. About an hour after the retail sales figures are released, we have the governor of the Reserve Bank of Australia hold a speech in a panel discussion titled “Inflation, Financial Stability and Employment” at the Hong Kong Monetary Authority and Bank for International Settlements High-Level Conference, in Hong Kong.
Later on, we have the Consumer confidence from the United States which has been progressively declining in the last quarter as the labor market has begun to deteriorate. In fact, unlike the University of Michigan Consumer Sentiment, which focuses on how consumers see their personal finances, Consumer Confidence focuses on how consumers perceive the labor market. The indicator is expected to decline to 101 points in November, down from 102.6 points in October.
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