Home Featured Unexpected Forex Implications on the US Housing Situation

Unexpected Forex Implications on the US Housing Situation

0
Unexpected Forex Implications on the US Housing Situation


In the coming days, we will receive a series data monthly from the US housing market. This data is refocused following the latest CPI reading. Therefore, it may have some impact on the dollar.

Remember that the FOMC’s policy decision will be announced the day before the CPI data is released. This means that the market will not have time to adjust its expectations based on the data. Markets could be affected by any component that provides insight into price changes.

Why it is important now

Both the headline reading and core readings of the last CPI figure were well below expectations. The latter is the most important for the markets, because that’s what’s tracked by the Fed. Most of that surprise was due a drop in the cost of shelter. This basically means that rental prices are lower. Rent costs are included in the core inflation rate, which excludes food or energy costs.

Apparently, analysts haven’t been paying enough attention to what’s been going on in the US housing industry to adequately forecast what would happen with CPI. This could be a problem beyond inflation as housing is the single largest industry in the US. It consumes the most raw materials .



Continue reading…