Trade Desk Thoughts - S&P/Case Schiller HPI

S&P/Case Schiller HPI (July) Actual -16.3%, Expected -16.1%, Previous -15.9%

Release Explanation: This is a report on monthly home prices of existing single family homes. The report is an index of prices rather than the prices themselves, and covers 10 city and 20 city composites. Important since the housing market is included in most economic forecasts. Retail Sales, CPI, and PCE in the US. A happy householder will usually lead to a strong economic outlook. A miss here, either way, and the Markets gets to see the real confidence of the US consumer. There is a very strong impact on the sentiment towards the US Dollar from this report.

Trade Desk Thoughts: The indices reached new record annual declines of 17.5% (10 city) and 16.3% (20 city), respectively. The 10-City level marked its 10th consecutive monthly report of a record decline, beginning with data reported for October 2007. While the annual returns of the two indices continue to reach record lows, the pace of the decline has slowed, particularly over the last three months. For the three months of May thru July, home prices cumulatively fell about 2.2%; whereas for the three months of February thru April, and November 2007 thru January, the cumulative rates of decline were closer to 6.0-6.5%.

"Economists and market participants will be sure to note the slower pace of decline in the index, although there is no indication in the report which implies housing prices have bottomed" said Matthew Carniol, chief currency strategist at TheLFB-forex.com. "The dollar has gained on the euro in overnight trading as rumors of an emergency rate cut from the ECB spread among the trade desks."

Forex Technical Reaction: The dollar continued to gain on the euro even as crude futures advanced. The dollar has also made a nice run against the yen in overnight trading as S&P futures gained 1.83%.

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