The Dollar-Yen Pair Unexpectedly Rises! The Power of 650,000 New Home Sales [Foreign Exchange Trading Diary 45]
Hello! This is Yuki, exhausted from Renofa Yamaguchi's away game in Nagasaki this weekend. (A losing match)
In this article, I would like to talk about the economic events of Monday, 8/25 and my trading situation!
Here is today's table of contents!
I got back from Nagasaki in the middle of the night and went straight to my part-time job in the morning, so I'm exhausted, but I did my best to write this note!
I would be suuuuper happy if you could support me with a like 😆
Let's get started!
Today's Economic Events
First, let's check the economic events for Monday, 8/25!
Gaitame.com, thank you for your help this week as well!
First, please take a look at this.
Is it true that Mondays tend to have fewer important events?
There is only one red 🟥 event with high importance,
at 23:00,
🇺🇸July New Home Sales
I've summarized what this economic event was like today!
Since I was sightseeing in Nagasaki that day, I couldn't follow the price movements closely, so let's check the results together while I summarize them in this note ❣️
🇺🇸 What are July New Home Sales?
First, I looked into what exactly New Home Sales is as an economic indicator!
This time, too, Chappy, the generative AI ChatGPT, summarized it in an easy-to-understand way, so please watch it as intently as the moment Egawa's header sinks into the net during the second-half stoppage time of V-Varen Nagasaki vs. Renofa Yamaguchi! (Self-harming behavior)
📌 What are New Home Sales?
• Overview
An economic indicator showing the number of newly built single-family homes sold in the U.S., expressed at an annualized rate.
Example: If 50,000 new homes were sold in July, it is announced as an annualized rate of 50,000 × 12 = 600,000 units.
• Reporting Agencies
U.S. Census Bureau and the Department of Housing and Urban Development (HUD).
Announced in the latter part of every month for the previous month.
⸻
📌 What is its significance?
1. Leading indicator of the economy
Since housing is a high-ticket purchase, it is heavily influenced by the economy, consumer income, employment conditions, and interest rates.
→ Increase in sales = A sign that consumers are confident about the future.
2. Relationship with interest rates
When mortgage rates rise, home purchases tend to decrease.
→ Highly susceptible to the Fed's monetary policy.
3. Impact on stocks, forex, and interest rates
• Stronger results than expected → Judged as a strong economy, tends to lead to dollar buying.
• Weaker results than expected → Can lead to dollar selling due to concerns about economic slowdown.
⸻
📌 Difference from Existing Home Sales
• New Home Sales → Sensitive to economic fluctuations (directly linked to mortgage rates and construction costs)
• Existing Home Sales → Reflects the "scale of the market" as it accounts for the majority (about 90%) of the housing market
⸻
👉 In short, New Home Sales is an "indicator that can forecast the U.S. housing market and consumer sentiment," and the forex and stock markets tend to move immediately after the announcement.
How was that?
I have covered several housing-related indicators before, but this time's New Home Sales, as the name suggests, is something that reads the economy from the number of new single-family home sales.
Indeed, many new single-family homes were built in Japan during the bubble era when the economy was good too~(I wasn't born yet)
Now, let's take a look at how those New Home Sales turned out.
Sales exceeded expectations, but...?
-Result-
Please take a look at this image.
(Do 650,000 new homes really sell in a single month!?)
Now, let's talk briefly about the results.
✅ Sales volume exceeded expectations
However, it is important to note that it fell below the revised figure from last time⚠️
(The previous revised figure was 65.6, the forecast was 62.9, but the result was 65.2)
That said, it is a better result than expected, so it seems likely to react with dollar buying, but what actually happened?
Let's check the currency price movements right away!
-Currency Price Movements-
Please take a look at this.
This shows the USD/JPY price movements from 13:00 on Monday, 8/25 to around 6:00 on Tuesday, 8/26.
From 23:00, when the new home sales figures were announced, the USD/JPY, which had fallen slightly just before, reacted with an increase!
Could it be because it exceeded expectations?
Hints of a rate cut were dropped by Chair Powell in a press conference last week, but is the housing market relatively booming?
However, one thing to note is that this indicator is for July, so it is possible that the next month's announcement could see a 180-degree change in the wind.⚠️
Also, on this day, the USD/JPY was generally on an upward trend, so it can also be interpreted as moving along with that flow.
The USD/JPY fell significantly at last week's Jackson Hole Symposium, but it has recovered faster than expected.
It might not be too long before it returns to the 1 dollar = 148 yen range, but since there is also a possibility of a rate cut, I will carefully watch for the right timing and consider purchasing US dollars again!
Trade ① & ②
Come to think of it, although it has nothing to do with new home sales, I made two trades on the morning of this day.
Please take a look at this.
I purchased 115.93 euros worth 20,000 yen at 172.51 yen per euro, and 135.63 dollars worth 20,000 yen at 147.46 yen per dollar.
I bought each of them.
Here are my reasons!
(Purchase time was 9:07 AM)
・Foreign currencies were weakening due to the influence of the Jackson Hole Symposium
・I judged it to be a dip since they had been rising continuously since the market opened at the start of the week
・I had returned all my balances to Japanese yen last week, so I had plenty of room to make a move
For the above reasons, although unrelated to economic indicators, I purchased 20,000 yen each of US dollars and euros.
My policy is to actively sell them once they turn a profit!
Conclusion
How was it?
Today, I have provided a thorough explanation of the highlight economic event of Monday, 8/25, the July New Home Sales in the US!
I am satisfied that I was able to enjoy learning about the economy today and introduce my trading situation as well!
I just went on the Renofa away game to Nagasaki this week, but I have the Mito away game coming up next weekend.
I have part-time work every morning and evening, but I want to make sure I trade foreign currency during the time in between and summarize it properly on note!
I would be happy if you could support me with a Like, and read my next article!
Well then, that's all for today!
See you in the next article.
(👇Click here for past articles you should also read👇)
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