December Construction Spending Rose More Than Expected; USD Extends Loss
THE TAKEAWAY: U.S. Construction Spending Rose More Than Forecast in December> both Private and Public Construction Spending Climbs > U.S. Dollar Extends Loss
The U.S. Census Bureau of the Commerce Department reported today that construction spending during December 2011 climbed 1.5 percent at a seasonally adjusted annual rate of $816.4 billion. The print beats consensus forecast as economists surveyed by Bloomberg News had projected a modest gain of 0.5 percent. November reading was downwardly revised to $804.0 billion. From a year prior, the total value of construction work done in the U.S advanced 4.3 percent.
U. S. Construction Spending (MoM): May 2010 to Present
Prepared by Trang Nguyen
U.S. building outlays rose more than expected in December due to considerable pickup in both private and public construction spending. Spending on private construction surged 2.1 percent to a seasonally adjusted annual rate of $529.7 billion, driven by 0.8 percent gain in residential construction expenditure and 3.3 percent rise in nonresidential construction. Also, public construction outlays edged up 0.5 percent at seasonally adjusted annual rate of $286.6 billion. The rise was mainly driven by greater spending on educational and highway construction. Since construction industry makes a significant contribution to the U.S. Gross Domestic Product, a surge of 1.5 percent in construction spending in January suggests a more robust recovery in the world’s largest economy.
EUR/USD 1-minute Chart: February 1, 2012
Charts created using Strategy Trader– Prepared by Trang Nguyen
The one-minute USD/CAD chart above illustrated that the USD/CAD dropped approximately 20 pips from 0.9985 to 0.9965 minutes after the construction spending report. The separated ISM Manufacturing report issued at the same time also revealed that manufacturing expanded at the highest level in seven months in January. Apparently, fundamental data points to better outlook for the U.S. economy, thus stoking investors’ appetite for risk and weigh on the reserve currency. At the time this report was written, the U.S. dollar trades at C$0.9966.
--- Written by Trang Nguyen, DailyFX Research Team for DailyFX.com
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.