Existing Home Sales Rise 14.5% In February

Key Insights

• Existing Home Sales have easily exceeded analyst expectations. 
• Traders expect that the Fed will raise the rate by 25 bps tomorrow. 
• U.S. dollar tries to rebound from session lows after the release of the housing data. 

Existing Home Sales Beat Analyst Expectations

On March 21, U.S. released Existing Home Sales report, which indicated that Existing Home Sales increased by 14.5% month-over-month in February, compared to analyst consensus of +5%.

Existing Home Sales have been falling for many months due to rising interest rates. The sudden uptick in Existing Home Sales shows that the housing market may have finally reached a bottom.

It remains to be seen whether housing data will have a material impact on the Fed Interest Rate Decision, which will be released tomorrow. The FedWatch Tool indicates that there is a 83.4% probability of a 25 bps rate hike at the upcoming Fed meeting. Traders expect that the federal funds rate will drop to 425 – 450 bps by the end of the year.

U.S. Dollar Tries To Rebound From Session Lows

U.S. Dollar Index moved away from session lows after the release of the Existing Home Sales report. The rebound of the housing market provides Fed with an opportunity to be more hawkish in order to fight inflation. However, the Fed may ignore housing data and focus on the crisis in the regional banks sector, which could be bearish for the American currency.

SP500 moved away from session highs after the release of the report. It looks that traders are worried that Fed may be more hawkish than expected despite the problems in the banking sector.

Gold continues to pull back from yearly highs as traders take profits off the table after the strong rally. The U.S. housing data did not have a material impact on gold price dynamics.

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