Home sales declined in October to their lowest level since 2010, a new trough for a housing market that has been hovering near rock bottom for more than four years
U.S. existing home sales fell by 5.5% in October, reaching their lowest level since 2010, underscoring persistent weakness in the housing market that has remained depressed for over four years. This decline highlights ongoing affordability challenges and rising interest rates, factors that are dampening consumer demand. For the FX market, the trajectory of the housing sector may influence the Federal Reserve's monetary policy approach as the economy continues to grapple with inflation and growth pressures.
Where it sits in our coverage
Our consensus EUR/USD target sits at 1.075 (median across 8 firms), with Goldman at the upper bound (1.12) and BofA at the lower (1.04). The current downturn in home sales could weigh heavily on the sentiment surrounding the dollar as traders assess the broader economic implications.
How firms align
Goldman maintains a bullish stance at a target of 1.12, suggesting confidence in a rebound in risk sentiment despite current housing market pressures. Conversely, BofA's target of 1.04 is more conservative, reflecting concerns about prolonged economic weakness and potentially tighter monetary policy responses. See internal reports on /reports/goldman and /reports/bofa for detailed positions.
What the data shows
Revisions from economists are anticipated in light of the housing data, with weakened forecasts reflecting potential downturns in consumer spending. For deeper insights, refer to /research/housing-market-impact.
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
- 01Existing home sales hit their lowest point since 2010.
- 02Traders should monitor implications for Fed policy as housing stalls.
- 03Risk remains near 1.075, with potential volatility if trends persist.
Market implications
Investors should watch for upcoming housing data releases, particularly next month's sales figures, to gauge the sticky nature of existing weaknesses. A breakdown of 1.075 in EUR/USD could lead to increased bearish sentiment ahead of the Fed's next meeting.
Risks to this view
A more aggressive-than-expected Fed policy shift could invalidate the current bearish sentiment. If home sales begin to recover or inflation data surprises positively, it could lead to a reversal in expectations.
Sentiment by currency
USD EUR~JPY~GBP~Composite USD score: -0.35
Sources & References
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