Forex Trading and relation with Housing Loans

Of all the forex fundamental announcements, one of the very important news is the declaration of Hosing Loan report. It is important, but surprisingly, very less number of people pay attention to it. Most of the traders just look at Non Farm Pay Rolls (NFP)

Housing Loans report not only gives a good overview of how the economy is doing, but it also tells how the banks are doing in particular which is very important in forex trading.

Lets imagine that in a particular housing loan report, it was mentioned that the number of poeple whick acquired loan from banks has reduced from 10,000 to 8000 in last one month.

What this tells is -

1. Number of people who are able to afford buying a new house has reduced. This can mean that the economy is weakening.

2. It also means that banks did not have more customers as compared to last quarterand so the bank may face issues if this trend continues.

3. This also effectively means in a weakening economy that of the market continues to decline, the banks will need some assistance from the government.

All this is collected from a single housing loan report. I guess there may be other information that can be collected which I am not aware of.

This information shapes the direction of the forex currency pair. Any indication of a weakening economy will cause the home currency to tumble. For example if British housing loans report is weak, imagine what will happen to GBP and what will it do to USD in GBP/USD currency pair.

The most influention fundamental economic announcement in forex world are  -

1. Non farm Payroll

2. FOMC.

But the Housing Loan announcement cannot be underestimated when trading forex