US New Home Sales Miss Forecasts by Wide Margin

The greenback remained range bound against the yen following the release of mixed economic data from the US. While the unemployment claims were far below expectations, new home sales data missed forecasts. Furthermore, the crude oil inventories data also failed to buoy sentiment.

On Thursday, the USD/JPY pair traded in a narrow range of between 103.81 and 103.95. According to the US Census Bureau, core durable goods orders increased 0.4% m-o-m in November, following an increase of 1.9% in the earlier month and greater than the 0.5% rise anticipated by economists.

Data provided by Bureau of Economic Analysis indicated that core PCE (personal consumption expenditures) price index remains flat on m-o-m basis in November. Economists had anticipated the core PCE price index to increase 0.1%. Similar to November, in the prior month, core PCE price index remained unaltered on m-o-m basis.

The statistical organization also stated that personal income declined 1.1% m-o-m in November, following a drop of 0.6% in the earlier month and worse than the 0.3% decrease anticipated by economists.

The Bureau of Economic Analysis stated that personal spending fell by 0.4% m-o-m in November, following an increase of 0.3% in the earlier month. Economists had anticipated personal spending to decline by 0.2%.

Personal income fell by $221.80 billion (or 1.1%) in November, while disposable personal income (DPI) declined $218 billion (or 1.2%). Personal consumption expenditures (PCE) dropped $63.30 billion (0.4%).

Real DPI declined 1.3% in November and Real PCE fell by 0.4%. There was no change in the PCE price index. Likewise, barring food and energy, there was no change in the PCE price index. The $58.50 billion fall in real PCE represents includes decline in consumer spending of $53.70 billion related to goods and $12.10 billion associated with services.

Personal outlays fell $66.80 billion in November, while personal savings were $2.22 trillion in the same period. Personal savings rate stood at 12.9%.

As per Census Bureau durable goods orders increased 0.9% m-o-m in November, following an increase of 1.8% in the prior month. The market had anticipated the durable goods orders to increase 0.6% during the reported period.

According to the Department of Labor, first-time jobless claims decreased to 803,000 in the week ended December 19, from 892,000 (upwardly revised from 885,000) claims in the earlier week. The Consensus estimates called for unemployment claims of 882,000.

The four-week moving average was 818,250, compared with 814,250 (upwardly amended from 812,500) in the prior week.

According to the US Census Bureau and the Department of Housing and Urban Development, new home sales were 841,000 units in November, compared to 945,000 units in October. Analysts had anticipated an increase in the new home sales to 994,000 units.

The reported figure is 11% below October’s amended level. However, it is 20.8% higher than the November 2019 figure of 696,000.

Furthermore, the median sales price of new houses sold in November was $335,300. At the end of November, there were 286,000 new houses available for sale.

According to the University of Michigan, consumer sentiment index declined to 80.70 in December, from 81.40 in November, and slightly below the reading of 81 forecast by economists.

However, current economic conditions index increased to 90 in December, from 87 in November. Likewise, the index of consumer expectations inched higher to 74.60 in December, from 70.50 in the prior month.

Commenting on the info, Richard Curtin, Surveys of Consumers chief economist, said “while the rollout of the vaccine has been greeted as the beginning of the end, the end of the pandemic is still on the distant horizon in terms of a return to normalcy for consumer behavior, even among the most favored households. Precautionary motives will continue to shape both economic and personal behavior.”

According to Energy Information Administration, crude oil inventories declined by 0.6 million barrels in the week ended December 19, following a drop of 3.1 million barrels in the earlier month. Economists had anticipated a decline in the crude oil inventories by 2.90 million barrels.

For the reported week, the US crude refinery inputs were 14 million barrels per day (on average), down 169,000 barrels per day from earlier week average. The US crude imports averaged 5.60 million barrels per day, an increase of 140,000 barrels per day in the earlier week.

The USD is expected to remain range bound, with slight bearish bias against its peers in the days ahead.