US Dollar Takes Gains as Housing Rebounds From a Winter Slowdown

Talking Points:

• US Housing Starts reached a 5-month high following a winter slowdown
• Building permits issued in April the highest in 5-years
• USD/JPY rises 20 pips after yesterday’s decline

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The number of building permits issued in the United States in April rose to a 5-year high, and housing starts reached a 5-month high, according to the Commerce Department. The pickup in housing activity following a slow winter sent the US Dollar higher in Forex markets.

The Federal Reserve announced in April that it will continue with measured asset purchase reductions but keep the target rate unchanged for some time. However, Fed Chair Yellen has previously said that future policy will depend on upcoming data releases. Therefore, improved housing data may indicate improving economic conditions and encourage a tightening of monetary policy, which would be bullish for the US Dollar.

USD/JPY 1-Minute: May 16, 2014

The US Dollar rose more than 20 pips against the Japanese Yen following the housing data to a new daily high at 101.67. Currency Strategist Ilya Spivak warns that USD/JPY may be vulnerable to deeper losses following the break of a rising channel from February.

USD/JPYDaily by Ilya Spivak

Charts created by Baruch Spier and Ilya Spivak using Marketscope 2.0. Add DailyFX Support/Resistance to your charts at FXCM Apps.

-- Written by Baruch Spier, DailyFX Research. Feedback can be sent to [email protected] .