Canadian Housing Starts Slumped to 8-month Low in November; Loonies Falls
THE TAKEAWAY: Canadian Housing Starts Dropped in November> Starts in Urban Multi-family Significantly Plummeted> Canadian Dollar Weakens
Canadian housing starts plunged to the lowest level in eight months in November, led by falls in urban multi-family. Canada Mortgage and Housing Corp. reported today that starts disappointedly slumped 13.3 percent to 181,100 at a seasonally adjusted annual pace in November from an upwardly revised 208,800 in October. The figure misses consensus forecasts as economists polled by Bloomberg survey had predicted a smaller decrease to 395,000. From a year prior, Canadian dwelling starts tumbled 7.6 percent compared to a gain of 21.3 percent in the previous month.
Canadian Housing Starts (Monthly Change): June 2010 to Present
Prepared by Trang Nguyen
Canadian dwelling starts declined more than forecast in October as housing construction deteriorated in both urban and rural areas. Starts in urban areas significant plunge 14.4 percent to 158,900, the lowest level since April, 2011, entirely triggered by a dramatic fall in multi-family starts. Urban-multiples, the most volatile component, slid 23.3 percent to 95,300 in the month. Meanwhile, urban singles modestly gains 3.6 percent to $63,600, insufficient to compensate the drop in multiples component. Besides, housing construction in rural areas also retreated 3.9 percent to 22,000 in the month after surging 13.2 percent to 23,100 in October. On the regional basis, Quebec and Atlantic reported the biggest declines in starts while Ontario and Prairie registered the strongest increase.
CAD/USD 1-minute Chart: December 8, 2011
Charts created using Strategy Trader– Prepared by Trang Nguyen
Canadian dollar lies in a group of losers in the North American trading session today and declines further following the housing starts release. As can be seen from the 1-minute USDCAD chart above, the currency pair transitorily fell 30 pips from 1.0080 to 1.0050 within 30 minutes. After that, the loonie lose its ground, pushing the USD/CAD pair 70 pips higher from 1.0050 to 1.0120. The Relative Strength Indicator rose above 70 to the overbought territory twice, signaling that that foreign exchange trading crowd was massively buying the greenback while cutting their loonie holdings. Risks sentiment quickly fades in the market today as European Central Bank was not aggressive enough in solving euro zone debt crisis, lifting the greenback versus other currencies. At the time this report was written, the Canada’s dollar drop to C$1.01202 per greenback in Toronto.
--- Written by Trang Nguyen, DailyFX Research Team for DailyFX.com
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