Global macro overview for 29/06/2017:
The US Pending Home Sales data has surprised the market participants. The sales fell 0.8% in May compared with expectations of a 0.8% gain for the month and it was the second month in a row of a decrease. The Northeast was the only region to register year-on-year growth all other regions except the Midwest recorded a decrease in sales. Moreover, a much higher proportion of homeowners consider that now is a good time to sell, but there has been no significant increase in listings. According to National Association of Realtors (NAR), this situation might be an important part of the problem: a buying interest is sold, but there is not enough supply on the market right now. The last good month for home sales was in May when housing starts and building permits were weaker than expected.
The Pending Home Sales report is an advanced read on trends in the US housing market. Housing is typically correlated to the overall state of the economy; particularly indicative of economic turning points. A sharp drop in housing demand typically acts as a warning signal of economic slowdown. The peak for the home sales was in March this year and since then the 5.6% high hasn't been challenged yet. On the other hand, the lack of enormous increase in home sales does not mean the US economy is slowing or slumping back into recession as since early 2015 the home sales are oscillating between -5.0 and 5.0 percent range. When the FED will again increase the interest rate and the US Dollar will be a little more expensive, the home sales should start to pick up again.
Let's now take a look at the USD/CAD technical picture at the H4 timeframe. The market just bounced slightly from the technical support at the level of 1.3008 after the technical support (now resistance) at the level of 1.13165 was violated. The trading conditions are oversold and there is a visible bullish divergence between the price and the momentum indicator.
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