Forex News – Canada housing starts rise unexpectedly, loonie up

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In intra-day European session, USDCAD reached parity for the first time since January 31 as commodity-linked currencies suffered as a result the U.S. credit downgrade.

However, the loonie rebounded and rose for the first time in eight days. Market sentiment picked U.S. stock-index futures advanced, as well as data from Canada on housing starts. USDCAD is currently trading at 0.9906 at 14:20 GMT.

Canadian housing starts increased more than expected by 4.3 percent in July. Canada Mortgage and Housing Corp (CMHC) reported that this increase was mostly elevated by a big jump in multi-residential construction which rose to a seasonally adjusted annualized rate of 205,100 units. That is up from a downwardly revised 196,600 units in June, which were originally reported at 197,400 units. The number of starts in July was above the average forecast of analysts who had called for 196,000 starts.

The optimistic data sets the third quarter off to a strong start in new home construction which plays a key role in Canada and offers vital support to the economy.

Meanwhile, crude oil for September delivery also rose today, helping lift the Canadian dollar which is a commodity-linked currency and a major oil exporter.

Crude oil climbed to as high as US$83.03 from an earlier low of $75.70.