The Loonie Weakens Despite Canadian Housing Starts Beats Forecasts In September

By Trang Nguyen,

THETAKEAWAY: Canadian Housing Startsgrows more than forecast > Startsin multi-family and urban areas significantly gained > The CanadianDollar weakens versus the dollar.

Canada Mortgage and Housing Corp. reported today that Canadian housing starts surprisingly jumped 7.3 percent to 205,900 at a seasonally adjusted annual pace in September from an upwardly revised 191,900 in August. From a year prior, the nation’s housing starts advanced 11.1 percent. The figure beats the median forecasts as economists polled by Bloomberg survey had only called for the reading of 190,000. As a barometer measuring the strength of Canada’s construction sector and housing market and a leading indicator for the economy for the whole, the housing starts picking up in September from the fall in a preceding month is a good sign for Canadian housing demand and raises hopes that the country might maintain its consistent pace of economic growth in near term.

Canadian Housing Starts: January 2010 to Present

Prepared by Trang Nguyen

Gains in multi-family and urban areas mainly contributed to the surge in housing starts in Canada in September. Multi-family starts rose 14.2 percent to 118,000 from 103,300 in the previous month. Likewise, starts in urban areas edged up 8 percent to 185,900 from 172,200. Rural area starts also slightly improved 1.5 percent to 20,000. In contrast, single family starts decreased 1.5 percent to 67,900. On the regional basis for urban areas, Atlantic region, Quebec and British Columbia registered the strongest increase. Specifically, starts in Quebec increased to 50,700 from 38,400 in August, starts in Atlantic moved up to 12,200 from 8300 and starts in British Columbia gained to 27,400 from 23,100.

CAD/USD 1-minute Chart: October 11, 2011

Charts createdusing Strategy Trader – Prepared byTrang Nguyen

TheCAD/USD traded in a narrow range within five minutes before andafter the housing starts data released. The Canadian dollarsuddenly loses its ground against the greenback after twentyminutes despite the figure printed better than forecast. As can beseen from the 1-minute USDCAD chart above, the currency pairrapidly hiked 45 pips from 1.0280 to 1.0325. TheRelative Strength Indicator roseabove 70 to the oversold territory, signaling that thatforeign exchange trading crowd was massively sellin g theloonie in favor of the greenback. It is obvious that intensifiedsovereign debt crisis in Europe, slow recovery in the United Statesand slowdown in emerging countries plummeted investors’sentiments and forced currency traders to seek for safe havens. Atthe time this report was written, the Canada’s dollar tradedat C$1.0311 per greenback in Toronto.

--- Written by Trang Nguyen, DailyFX Research Team for DailyFX.com

To contact Trang, email tnguyen@dailyfx.com
DailyFX is the forex news and research arm of FXCM, Inc (NYSE: FXCM), which provides currency trading and brokerage services and is an advertiser on TheStreet websites. Any opinions, news, research, analyses, prices, or other information is provided as general market commentary, and does not constitute investment advice. Dailyfx will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. Currency trading involves significant risk of loss. Individual authors may hold positions in the currencies discussed in the article.

Original Article: http://www.dailyfx.com/forex/market_alert/2011/10/11/101011_Canada_Housing_Starts.html

DailyFX is the forex news and research arm of FXCM (NYSE: FXCM), which provides currency trading and brokerage services and is an advertiser on TheStreet websites. Any opinions, news, research, analyses, prices, or other information is provided as general market commentary, and does not constitute investment advice. Dailyfx will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. Currency trading involves significant risk of loss. Individual authors may hold positions in the currencies discussed in the article.

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