Trade Desk Thoughts - S&P/CS Composite-20 HPI

S&P/CS Composite-20 HPI (y/y) Actual -15.9%, Expected -16.2%, Previous -15.8%

Release Explanation: The change in the selling price of single-family homes in 20 metropolitan areas. This report is important since the housing market is included in most economic forecasts and because the present economic problems are due in part to the decline in housing prices since 2006. 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 index has been declining since January 2007 and while the yearly decline to June was less than economists had expected, the 15.9% decline in the 20-city composite is a new record. The National Home Price Index, which covers all nine U.S. census divisions, remained in double digits at a record 15.4% decline in the second quarter of 2008 versus the second quarter of 2007 that was larger than the decline of 14.2% reported in the first quarter of the year.

"While the annual decline to June set a new record, the report indicates the month over month declines appear to be slowing," said Matthew Carniol, chief currency strategist at TheLFB-forex.com. "The 10 and 20 city composites were down 0.6% and 0.5% respectively but were less than the 2-2.5% monthly drops seen earlier in 2008. However, no region is showing a gain over the past 12 months and seven areas are still reporting losses of over 20%."

Forex technical Reaction: The dollar had gained against a basket of major currencies as oil declined 1.6% in overnight trading. The dollar began to give back some of its gains when S&P futures turned negative and oil began to rise.

Written by TheLFB Trade Team, © 2007-2008 LFB Services, LLC. All rights reserved. http://www.TheLFB-Forex.com

TheLFB Risk Disclaimer can be found at http://www.thelfb-forex.com/content.aspx?id=174.

The Copying, Broadcast, Republication or Redistribution of TheLFB Content is Expressly Prohibited Without the Prior Written Consent of LFB Services, LLC.