Trade Desk Thoughts - Canadian Housing Starts

Daily Forex Fundamentals | Written by TheLFB-Forex.com | Sep 09 08 13:21 GMT |

Canadian Housing Starts (August) Actual 211k, Expected 194k. Previous 187k

Release Explanation: An economic indicator that measures the annualized number of new residential buildings that began construction during the previous month, released by the Canada Housing and Mortgage Corporation (CHMC). It is an important report since the housing market is included in most economic forecasts. Retail Sales, CPI, and PCE in the US. A happy householder will usually lead to a strong economic outlook. A miss here, either way, and the Markets gets to see the real confidence of the Canadian consumer. There is a very strong impact on the sentiment towards the Canadian Dollar from this report.

Trade Desk Thoughts: According to the CMHC, The seasonally adjusted annual rate of urban starts rose 15.2% in August compared to July. Both urban multiples and singles moved higher, with an increase of 25.2% for multiples to 114,700 units, and a 2.0% increase for singles to 71,200 units.

The seasonally adjusted annual rate of urban starts was down in every region except Ontario where housing starts jumped 81.0% to 86,500. Urban starts sagged 22.5% to 23,700 units in the Prairies and dropped 11.5% in Atlantic Canada. Smaller declines of 8.7% and 8.2% were recorded in Quebec (37,600 units) and British Columbia (30,400 units) respectively. Actual urban single starts for the January to August period of this year were 16.8% lower than they were a year earlier, while urban multiple starts were up by 17.6% over the same period.

"While the headline number of starts shows improvement, the 16.8% yearly decrease in urban single starts for the January to August 2008 period indicates overall weakness in the housing sector," said Matthew Carniol, chief currency strategist at TheLFB-forex.com.

Forex Technical Reaction: The Cad rose about 10 pips after the report was released. Also important for today is the potential for Hurricane Ike to cause damage to energy production facilities in the Gulf of Mexico. Ike has weakened, and its projected path now places it somewhat west of most oil rigs in the gulf. Crude futures were recently trading 1.55% lower on the day at $104.71 per barrel.

Written by TheLFB Trade Team, © 2007-2008 LFB Services, LLC. All rights reserved. http://www.TheLFB-Forex.com