Housing starts data measure the number of residential units on which construction is begun. These, taken with related figures, (Pending Home Sales, Construction Spending m/m) go a long way to make up the economic backdrop that affects USD.

In the UK, other indices, for example, Mortgage Approvals, the Halifax House Price Index m/m also play a major part in the fundamental strength of GBP.

Ripple Effect
Unlike the situation a couple of years ago, (when, as always in a bubble, people got a bit silly), home-builders aren’t going to be starting up unless they are fairly confident of the end market and actually selling the units when they’re built.

And it’s not just the construction industry – the ripple effect is all the growth that goes with a new house – household appliances, furnishings all have to be bought, which acts as a multiplier across the wider manufacturing economy – which the markets are going to take notice of… So while commodities such as lumber are maybe most directly affected by Housing data, the ripple effect follows all the way through the economic fundamentals to reach the forex market.

Forex News Indicator
As a news indicator, Housing Starts data are definitely to be kept a close eye on.
In the present circumstances, with volatile markets across the board and the general air of pessimism, for example, Housing Starts figures less disastrous than expected in the forecast will certainly move USD in its pairs – so worth looking out for…