Gear Up

Traders are gearing up for another round of fundamental news while the markets are looking at a pre-news bearish pull. Today’s release of housing data showed a stronger rebound than expected after the -14% January plunge which hit a 9-year low. Building permits were up as well, mirroring the housing starts as a lagging indicator. The 38% plunge has been a significant drag on growth, as further risk surrounds the defaults coming from subprime borrowers. Fixed long-term mortgage rates now hover in the low 6% range, and downward price pressure on homes leave sales finding some stability as a return to positive construction waits for the huge supply of unsold homes to evaporate. Housing starts are a measure of the number of residential units on which construction is begun each month – a start in construction is defined as the beginning of excavation of the foundation for the building and is applied primarily to residential housing. Building permits are permits taken out in order to allow excavation. An increase in building permits and starts usually occurs a few months after a reduction in mortgage rates. Tomorrow, Crude Oil Inventory numbers will be released, along with the FOMC policy statement. On Thursday, Initial Claims and leading indicators will also give direction to the market. In the world of price action today, the Yen had a bit of a decline against the US Dollar. Starting the day, the pair was trading at 117.80 before pushing down to 117.21 off of uneventful comments from the BOJ. It is widely expected that Japan will raise rates soon, but it did not happen in last night’s release. This week should pick up as the heavy news is released. David Hilgeman, XPRESSTRADE Analyst