Summary: While new home sales rose 4.1% in August, the figures for the prior three months were revised downward (those three months already showed a declining market). This caused the dollar to decline slightly against the Euro yesterday. The currency market has been carefully watching the housing market. A declining housing market could trigger a cooling US economy, which in turn would trigger a rate cut, which in turn would increase selling pressure on the dollar. As High Frequency Economics chief economist Ian Shepherdson put it: “So, overall this report is worse than it first appears,”.
Related links: Full WSJ article • Housing Bubble and Real Estate Market Tracker • Consumer Confidence is Helping the Dollar • Will Debt Payments Drag Down GDP or the Dollar?
Potentially impacted stocks and ETFs: Euro Currency Trust (FXE)
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