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Loonie Holds Range as Canadian Housing Starts Cooled as Projected in May

By Trang Nguyen
08 June 2012 12:45 GMT

THE TAKEAWAY:Canadian Housing Starts slumped 13.3 percent to 211,400 in May> Starts in Urban Areas Plummeted> CAD Holds Range

Canadian housing starts slowed in May from April’s stunning high level due to deterioration in housing construction in urban areas. The report issued by Canada Mortgage and Housing Corp. today showed that starts disappointedly slumped 13.3 percent to 211,400 at a seasonally adjusted annual pace in May from a downwardly revised 243,800 in April. The print falls short of consensus forecasts as twenty-one economists polled by Bloomberg survey had called for a smaller monthly decline to 215,000. From a year prior, Canadian dwelling starts still rose 11.4 percent compared to a gain of 28.2 percent in the previous month.

Canadian dwelling starts declined more than forecast in May as improvement in rural area’s housing construction was insufficient to offset the significant slump in urban areas. Starts in urban areas unexpectedly plunged 15.8 percent to 189,600, mainly driven by a dramatic fall in multi-family starts. Urban-multiples, the most volatile component, slid 20.7 percent to 125,300, the first drop in six months. Similarly, urban singles fell4.2 percent to $64,300. In contrast, starts in rural areas increased 16.6 percent to 21,800. On the regional basis, Quebec (-35.8%) and Atlantic (-18.3%) reported the biggest declines in starts while British Columbia (+20.9%) and Atlantic Canada (+6.4%) registered the strongest advances.

USDCAD 1-minute Chart: June 07, 2012

060812_Canadian_Housing_Starts_May_body_Picture_1.png, Loonie Holds Range as Canadian Housing Starts Cooled as Projected in May

Chart created using Strategy Trader – Prepared by Trang Nguyen

Canadian dollar trades mixed ahead of the North American trading session today since the currency declined versus the greenback and high-yielding currencies but advanced against franc, pound and euro. As can be seen from the 1-minute USDCAD chart above, the currency pair fluctuated in the range of 1.0325 and 1.0348 after the housing report release. At the time this report was written, the Canada’s dollar saw some gain to C$1.03352 per greenback in Toronto.

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

To contact Trang, email tnguyen@dailyfx.com

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.
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08 June 2012 12:45 GMT