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USD/CAD Edges Higher on Weak Canadian Housing Data

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USD/CAD Edges Higher on Weak Canadian Housing Data

The North American currency pair was higher Monday, as an idle US dollar took advantage of disappointing Canadian housing data.

Canadian housing starts declined 5 percent last month, the Canadian Mortgage and Housing Corporation reported today. Housing starts slid to a seasonally adjusted pace of 180,248. A median estimate of economists in a Reuters poll forecasted a narrower drop. As Canada’s housing market shows signs of stabilizing, homebuilders will continue to adjust construction activity to manage inventory levels, the CMHC said.

In the United States, a dearth of economic data shifted the forex market’s attention to Federal Reserve Chair Janet Yellen, who is expected to make her first Humphrey-Hawkins testimony Tuesday. Yellen is expected to address weak payroll numbers over the past two months, while reassuring Congress bond tapering will be gradual and, more importantly, consistent with the economic data.

The USDCAD pair traded within a narrow range Monday, hitting a low of 1.1016 and a high of 1.1063. The pair has gained nearly 4 percent since the start of the year, but has pared nearly half a percent so far in February. As of 20:30 GMT, the pair was trading at 1.1054, a gain of 16 pips. Initial support is found at 1.0945, followed by 1.0918 and 1.0890. On the upside, resistance is ascending at 1.1060, 1.1088 and 1.1115.

In other trading, the US dollar was weaker versus the euro and Japanese yen. As of 20:30 GMT, the EURUSD currency pair was trading at 1.3636, a gain of 14 pips. Meanwhile, the USDJPY pair was down nearly 0.3 percent at 102.25.

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