Loonie Falls Despite Surge In April Housing Starts To Fastest Pace Since 2007

By Tzu-Wen Chen,

THETAKEAWAY: [Canadian housing starts accelerated in Aprilfor fifth straight month to fastest pace since September 2007] >[Continuing strength in housing market] > [CAD weakens vs.USD]

Housing starts in Canada unexpectedly accelerated in April for the fifth straight month to its fastest pace since September 2007. The Canada Mortgage and Housing Corporation reported a large jump to 244,900 housing starts at a seasonally adjusted annual pace in April, while March’s figure was revised slightly downwards to 215,200 from 215,600 originally reported. The median forecast of 21 economists surveyed by Bloomberg News had called for a slowdown to 204,000 housing starts in April. New starts soared by 28.8 percent in April from a year ago, compared with March’s year-on-year rate of 16.7 percent.

The pickup in housing starts in April was led by a surge in multi-family homes in urban areas, which recorded a 27.4 percent gain to 158,500 new starts. Meanwhile, housing starts in rural areas contracted by 19.0 percent from a month ago, reversing the 10 percent gain in March.

April's housing starts data follows yesterday’s news that the number of residential building permits approved had declined by 1.3 percent in March. This could indicate that we may see slight moderation in the coming months in the recent strength shown by the Canadian housing market, in what some analysts think is a housing bubble.

USDCAD 1-minute Chart: May 8 , 2012

Chart createdusing Strategy Trader – Prepared byTzu-Wen Chen

Despite the stronger-than-expected print, theCanadian dollar tumbled against the U.S. dollar in the minutesfollowing the data release. The loonie fell as much as 20 pips inthe first 15 minutes from pre-announcement levels, and despite aslight retracement, continued to trade weaker at C$0.9972 againstthe greenback at the time of this report.

--- Written by Tzu-Wen Chen, DailyFX Research
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/2012/05/08/Loonie_Falls_Despite_Surge_in_April_Housing_Starts_To_Fastest_Pace_Since_2007.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.

More from Currencies

Bank of England Holds Rates Steady, But Vote Shift Signals Hawkish Tone

Bank of England Holds Rates Steady, But Vote Shift Signals Hawkish Tone

Bitcoin Today: Prices Close to Flat in Low-Volume Trading

Bitcoin Today: Prices Close to Flat in Low-Volume Trading

Markets Wobble as U.S. Readies More China Tariffs

Markets Wobble as U.S. Readies More China Tariffs

Watch These Two Crypto Experts Fiercely Debate the Future of Regulation

Watch These Two Crypto Experts Fiercely Debate the Future of Regulation

Bitcoin Today: Prices Attempt to Rally Following Early Weakness

Bitcoin Today: Prices Attempt to Rally Following Early Weakness