
USD/CAD prints a 4-month high despite optimism of the housing starts and building permits data
- USD/CAD prints a 4-month high despite optimism of the housing starts and building permits data.
- Housing starts were recorded at 213,000 annualized units in January versus December's 196,000.
- Building permits grew by 7.4% in December versus November's 3.5% decline.
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The Canada Mortgage and Housing Corporation (CMHC) released the housing starts and building permits report for January on Monday. Despite beating the markets’ estimates on both fronts, however, USD/CAD was seen trading higher at 1.3324 following the release of the economic data.
The report highlighted housing starts in Canada to have posted a 4-month high in January. Housing starts were recorded at 213,000 annualized units last month. In December, this figure was capped at a much lower 196,000 annualized units. In a previous estimate, analysts had expected Canada to print 200,000 annualized units in housing starts report for January.
Building Permits Improved 7.4% In December
Copy link to sectionFollowing Monday’s data, 6-month trend was reported to have dropped to 211,000. In the monthly report by Statistics Canada, building permits were further accentuated to climbed to 227,000 in December. This marked a massive 7.4% growth in building permits. In November, building permits were announced to have fallen by 3.5% in Canada. Experts had anticipated the report to register a 3.5% gain in December.
Analysts at RBC Economics commented on Monday’s economic data and stated:
“We think the pace of starts will remain close to the current six-month trend rate, and while that’s stronger than the underlying pace of household formation, if anything there’s upside risk with markets thirsty for supply.”
1.3325 level on Monday marked a 4-month high for the USD/CAD currency pair in the forex market. In the early session, the pair had dropped sharply to below 1.33 level. Monday’s gain, as per the experts, was also recorded as its 8th consecutive day in which it posted a positive move.
USD/CAD Gains Traction Amidst Weaker Crude Oil Prices
Copy link to sectionThe optimism of the Canadian monthly employment report released on Friday faded away on Monday as the weaker crude oil prices weighed on the currency pair that is known to be linked with the commodity. Consequently, loonie was reported gaining back its traction in the forex market on Monday.
The weaker oil prices, as per the analysts, were attributed to falling global demand owing to the recent outbreak of Coronavirus in China. China has the reputation for being the largest importer of the crude oil across the globe.
USD/CAD is expected to sustain its Monday’s gains unless a significant economic data stirs volatility in the forex market. As such, investors and analysts alike are now focused on the U.S Federal Reserve’s chairman, Jerome Powell’s testimony scheduled for Tuesday.
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