THE TAKEAWAY: Canada housing starts slows less than expected in September > Housing construction should continue to slow amid tighter conditions > CAD bullish
Housing starts in Canada declined less than expected in September, as multiple urban starts slumped. The Canada Mortgage and Housing Corporation reported a slowdown to 220,215 on a seasonally adjusted annual basis in September, following an unexpected surge in housing starts the previous month. Meanwhile, the housing body revised its figure for August slightly upwards to 225,300 from 224,900 initially reported. The median forecast of 21 economist surveyed by Bloomberg News had called for 205,000 housing starts in September. New starts climbed 5.0 percent from a year ago, compared with August’s year-on-year gain of 16.9 percent.
The slowdown in housing construction falls in line with expectations that the Canadian housing market should continue to ease in coming months. In June, the Canadian government tightened conditions for both homebuyers and mortgage lenders to moderate Canada’s homebuilding sector, after persistent strength seen earlier this year sparked concerns of a possible housing boom.
USDCAD 1-minute Chart: October 9, 2012
Chart created using Market Scope – Prepared by Tzu-Wen Chen
In the minutes after the housing report was released, the Canadian dollar strengthened steadily against the U.S. dollar, gaining as much as 9 pips. At the time this report was written, the USDCAD pair was trading at C0.9746.
--- Written by Tzu-Wen Chen, DailyFX Research