Forex Market: New Home Sales data to be out today

In the US figures for sales of existing homes fell in February for the third month indicating that the high unemployment level is hindering demand in the housing sector. Sales dropped 0.6% to a 5.02 million annual rate, the lowest level in eight months. The expansion and extension of a federal tax credit that helped to stabilize the housing market in 2009 hasn't taken effect so far this year due to continuing high unemployment levels.

Existing home sales were forecast to fall to a 5 million annual rate from a 5.05 million rate in January. Data on existing home sales, which accounts for more than 90% of the market, is compiled from contract closings and may reflect purchases agreed weeks or even months earlier. This is why many economists consider new home sales figures, recorded when a contract is signed a more accurate and timely reflection of the market.

Data on new home sales is due to be published later today. The Commerce Department is expected to report that the figure rose last month after slumping in January to the lowest level since records began in 1963.

While borrowing costs are low and prices are down, sustained jobs gains are the missing ingredient in promoting a rebound in the housing market. The unemployment rate which reached a 26 year high of 10.15% in October is projected to end the year at 9.5%.

Also out in the US today are reports for core durable goods orders. The figure is expected to climb for the third month in a row adding to evidence of a recovery in the manufacturing sector. The projected rise in durable goods orders would follow a 2.6% jump in January that was the biggest since July 2009.

The US Dollar in the forex online market continued to gain on both the Pound and the Euro in yesterday's trading. The USD rose 0.58% against the Pound to close at GBP 1.5020. It appreciated 0.71% against the Euro which closed at EUR 1.3468.

In Britain yesterday figures revealed that the UK's inflation rate dropped more than forecast in February. Consumer prices rose 3% from a year earlier, after increasing 3.5% in January according to the Office for National Statistics. On the month, prices rose by 0.4%.

The Pound rose against the Euro yesterday, gaining 0.14% to close trading at GBP 0.8964.

The inflation rate fell because of large downward movements on prices from items like toys, books and gas bills. UK gas prices have been cut three times in the last 12 months with the last cut seeing prices fall by 7%, saving the average household 55 Pounds or $83 per year.