THE TAKEAWAY: CAD Housing Starts (AUG) > +224.9K versus +200.0K expected > USDCAD NEUTRAL
While the US economy’s housing sector has yet to find a meaningful bottom, the Canadian economy’s housing sector remains resilient. In August, Housing Starts accelerated to +224.9K, easily beating the consensus forecast of +200.0K, according to a Bloomberg News survey. This now marks the ninth consecutive month of Housing Starts equal to or greater than +200.0K, and the eleventh time in the past twelve months overall (November 2011: +186.2K).
Over the past several months, Bank of Canada policymakers have cautioned that a housing bubble may be forming, and although it is relatively premature, it is worth noting that they are taking a very proactive stance in the fight against irrational credit growth. In fact, at the Bank of Canada Rate Decision last week, there was a broadly hawkish tone employed, but for the recent dip in consumer prices in July.
USDCAD 1-minute Chart: September 11, 2012
Charts Created using Marketscope – Prepared by Christopher Vecchio
In the wake of the report, the Canadian Dollar weakened initially, but any losses were quickly taken back. The USDCAD inched higher from 0.9722 to 0.9732, but pulled back to 0.9712 within an hour of the release. At the time this report was written, the USDCAD was trading at 0.9728. Over the past four days alone the USDCAD has depreciated by -1.85%, making the pair’s total losses -6.61% since the June 1 close.
--- Written by Christopher Vecchio, Currency Analyst
To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com
Follow him on Twitter at @CVecchioFX
To be added to Christopher’s e-mail distribution list, send an e-mail with subject line "Distribution List" to cvecchio@dailyfx.com
