U.S. home building showed good improvement from extremely depressed levels in data released Tuesday. Housing starts were at a 598K annual pace in the month compared to the 550K expected and 541K prior. The 10.5% improvement is much better than the +0.7% climb expected. Housing starts are still far below the all-time high of 2246K in 2006 but analysts say slow home building will help the market buy down the huge amount of housing inventory in the U.S.

Going forward, the outlook for home building looks very tepid. Newly issued building permits were at a 569K pace in August which is roughly in line with the 560K expected and 559K prior.

Overall, the housing figures helped improve risk appetite but the effect was largely temporary as market participants are shy of putting on large trading positions in the hours leading up to the FOMC decision.