The United Kingdom has offered the latest housing numbers for August. According to the most recent report housing particularly in the construction sector has seen a decline. Growth occurred in July, but it declined a month later. Overall the year has shown an increase versus productivity from December 2011 through December 2012. While building activity fell slightly there is overall hope and signs of recovery. What does this mean to you based on forex training? If you have yet to study housing reports and how they can impact the forex market now is a good time to learn a bit about it. There are two examples that can be used to help you learn. The first will be the U.K. housing sector. You may also want to read details on Australia’s housing situation too.
Forex Training on Housing Reports
Housing reports show you how healthy the economy is. Consumers will not buy homes unless it is affordable or worth the risk. Most people have over half their net worth in a home they buy. Given how strong a hold the housing market has it is important to gain forex training for how this can affect rates.
There are four reports that come out. The U.K. report that recently hit the newsstands was about housing starts and building permits versus the existing and new homes sales, and the home price index. When you have increasing prices or activity in housing it means consumer confidence is up, refinancing is up, and consumer spending is up. Demands for imports and thus trade flows have also increased. A negative report will stop trade flows and investment flows. Additionally, according to forex training housing details the money supply will decrease when housing activity is up because of increased spending, leading to increased inflation, which then increases interest rates. An increase in activity naturally leads to a stronger currency since the supply in money is down, but there is demand for it.
Forex Training Example for Housing
Based on the housing activity report for the U.K. the construction sector, i.e. the building permits and new builds sector, has seen growth for over a year. However, in August the growth numbers were actually down. If you remember your forex training this means the report is negative for the month of August, which could decrease GBP rates for a short time. For longer term investments the report is actually going to strengthen the GBP standing and thus provide a long term purchase option.
Unfortunately, the housing report is just one of the many economic reports that can affect the GBP. You may never see a significant drop in GBP rates on a small piece of negative news because the U.K. market can be reacting on other positive news. Right now the USD is in trouble, although it rallied a little on Thursday. In this situation the GBP would gain over the USD despite the slightly negative news report. Always remember with forex training you have to examine the whole picture if you want to see what might reduce rates or help rates gain.
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