Your Economy (No Politics)

[Bullwinkle]

US Housing Data Downs Dollar
Thursday January 19, 12:53 pm ET


Dollar price action for the morning hours of the New York session was found on the 13:30 GMT release of December housing starts. According to the Census Bureau report, builders broke ground on 1.933 million new homes last month, the lowest level of starts since March. Taken along with the concurrent drop in the more inclusive building permits for the same month to 2.068 million, doubts in the strength of the housing market could begin turning into fears of a strong cycle of contraction. Builders are beginning to back away from taken on new projects as sales slow and inventories of unsold residences grow. Furthermore, demand from potential homeowners has thinned as lending rates climb in step with the Fed Fund rate and prices for available homes grow beyond American’s budgets. The past year has proven a strong one for the sector that has contributed profoundly to economic growth with homebuilders experiencing their second best year to date. Forecasts for the current year are far from spectacular, with many officials expecting homebuilding to actually detract from growth for the first time since 1995. The reaction to the housing data could have been worse, but was however tempered somewhat by the simultaneous release of initial claims. First time claims for unemployment benefits last week fell to their lowest level in nearly five years to 271,000 according to the Labor Department’s report. This decline in claims for the beginning of the month bodes well for non-farm payrolls which have wavered over the past five. December’s payrolls fell to a 108,000 new jobs added compared to 305,000 in November.

US stocks may have finally shaken its earnings driven decline as indices advance for the first day in five as much needed positive profit reports float indices higher. The NASDAQ Composite shot for the biggest advance by 16:45 GMT with a 14.81 points, 0.65 percent, rise to 2,294.45. The Dow Jones Industrial Average rose 0.1 percent, or 10.32 points, to 10,865.18 and the S&P 500 Index rose 2.29 points, or 0.18 percent, to 1,280.22. The biggest contributor to the Dow on the day was Pfizer whose shares rose $0.81 to $24.81 after fourth-quarter profits reported were $0.51 per share, 9 cents more than expected. Similarly, the world’s second largest chip maker, Advanced Micro saw shares surge $2.69 to $36.84 after the company announced its revenues jumped to $1.84 billion on a 45 percent rise in sales.

Treasuries were lower on the day despite housing data that dampens speculation for a longer hawkish run from the FOMC. Prices for the 10-year note dipped 7/32 to pay 101 03/32 of face value while yields added 3 basis points to 4.36.

http://biz.yahoo.com/fxcm/060119/1137697262.html?.v=1