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.
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Here’s a forex market movement for our times:-

Despite forecasts for a depreciation of the Dollar, many economists are now saying that the negative housing data released from the United States yesterday may actually bolster the USD.

Let’s state the effect in the simplest possible terms.

Bad news for the US economy, lower jobs, lower GDP, leads to lack of confidence
Which leads to a rush towards safe haven currencies…
Which leads to buying USD – because USD is in itself, considered a safe-haven currency…
So bad US news leads to USD going up.

This rush to a safe haven, any safe haven, after every news announcement is creating some weird effects. It flies in the face of logic, well, simple logic anyway – and is a sign of the present dominance of USD

No, I don’t know of any name for this upsidedown, wrong-way-round, echo, reverb effect – but it certainly ought to have a name…
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A consumer price index (CPI) is a measure of the average prices of consumer goods and services – basically it’s the “inflation rate”. It’s one of the most important indicators of confidence in, and the strength of, a national economy.

In the different currency zones, governments or (semi)independent organizations publish CPI figures on a monthly and yearly basis – in the US, it’s the Department of Labor, while in the UK, it’s the Office for National Statistics – where it’s called the Retail Prices Index (RPI).
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… Everybody is just standing there, blinking furiously – waiting for someone not to blink …

With the panic on, they’re all getting liquidity back and any movements are largely a function of who’s got more to clear out and how fast they can do it.

There’s no bank around at the moment who wants to be seen as lacking capital reserves, the spotlight falls on them and that can be self-fulfilling…
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A dodgy alliteration, but now the heat has turned on Hypo – so what does the German government do, rushes to the rescue, guaranteeing savings everywhere. Other countries in the Euroland won’t be too unhappy about this, but the UK definitely will be.
This is now socio-political concerns completely overriding the economic forces – ie. very definitely not a free market and not capitalism.
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