USDCAD Next Leg Lower Underway09 June, 2015 by Aayush Jindal in Fundamental Analysis, Market Analysis, Technical Analysis, USDCAD
- US Dollar moved lower against the Canadian Dollar and broke a crucial support zone.
- Canadian Building Permits released by the Statistics Canada increased by 11.6% in April 2015, compared with the preceding month.
- Canadian Housing Starts report was also released, which posted a reading of 201.7K, compared with the forecast of 185.0K in May 2015.
- USDCAD traded lower and looks set for more downsides in the near term.
Canadian Housing Starts and Building Permits
Earlier during the NY session, the Canadian housing starts report, which represents the number of new single-family homes or buildings were constructed was released by the Canadian Mortgage and Housing Corporation. The forecast was lined up for an increase of 185.0K in April 2015, compared with the preceding month in which it came in at 183.3K. However, the outcome was above the forecast, as the Canadian housing starts came in at 201.7K. Moreover, the last reading was also revised up from 181.8K to 183.3K.
The report stated that the standalone monthly SAAR was 181,814 units in April, which was lower compared with March reading of 189,546. Furthermore, the SAAR of urban starts fell by more than 6% to 165,445.
Commenting on the report release, the Chief Economist at CMHC’s Market Analysis Centre, Bob Dugan, stated that “Elevated levels of multi-unit starts during mid-2014 caused the trend to peak in September. Starts activity since then has trended down to current stable levels as builders have adjusted activity to manage inventories”.
The Canadian Building Permits report, i.e. the number of permits for new construction projects was also released. The outcome was yet again on the higher side, as the Building Permits rose by 11.6% in May 2015.
USDCAD – Technical Analysis
The US Dollar after setting a high around the 1.2560 against the Canadian Dollar moved lower and crashed below the 100 hourly simple moving average. There was a bullish trend line on the hourly chart of USDCAD, which was also breached during the downside rally. The pair settled around the 1.2400 support area.
If the pair corrects higher from the current levels, then the broken trend line might act as a resistance for the pair. It also coincides with the 23.6% Fib retracement level of the last leg from the 1.2561 high to 1.2396 low.