THE TAKEAWAY: [Canada housing starts declines sharply in July] > [Homebuilding slows amid tighter conditions in a bid to deflate possible bubble] > [USDCAD mixed]
Housing starts in Canada declined more than expected in July, amid broad-based slowdowns in residential construction in both urban and rural areas. The Canada Mortgage and Housing Corporation estimated that the pace of housing starts fell to 208,500 on a seasonally adjusted annual basis in July, following a surprise rise to 222,700 the previous month. The median forecast of 19 economist surveyed by Bloomberg News had called for 213,000 housing starts in July.
The strength in Canada’s homebuilding sector in recent months had sparked concerns of a possible housing boom. In response to these fears, the Canadian government moved in June to tighten conditions for both homebuyers and mortgage lenders in a bid to deflate a possible bubble before it bursts. Today’s data suggests that the pace of housing starts is beginning to moderate as the tighter lending conditions come into effect.
USDCAD 1-minute Chart: August 9, 2012
Chart created using Market Scope – Prepared by Tzu-Wen Chen
Trading of the Canadian dollar was mixed against the U.S. dollar in the minutes following the release of the housing data. At the time this report was written, the USDCAD pair was trading at C$0.9937.
--- Written by Tzu-Wen Chen, DailyFX Research
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