The CAD/JPY currency pair today rallied briefly after the release of positive housing starts and building permits data, which exceeded expectations. However, the rally was short-lived as the loonie’s weakness against the US dollar, its main trading partner, spread to affect the Canadian dollar’s performance against other currencies.
The CAD/JPY brief rally led to the currency pair hitting a daily high of 85.22, but the pair had retraced most of its daily gains as at the time of writing.
The currency pair’s brief rally was triggered by the release of Canadian housing starts data for February, released by the Canada Mortgage and Housing Corporation (CMHC), which were recorded at a high of 210,207, versus the expected 200,000. The rally was also supported by the building permits report released by Statistics Canada, which indicated that the value of building permits issued had increased by 5.4%, as opposed to the expected 3.0%.
The Canadian dollar’s performance was also adversely affected by the stronger US dollar as tracked by the US Dollar Index, which hit a daily high of 102.19. The Canadian dollar was also boosted by positive market sentiment given the high number of net longs on the loonie.
The Canadian dollar’s future performance is likely to be affected by the release of the Canadian new housing price index tomorrow, and the release of non-farm payroll report in the USA on Friday.
The CAD/JPY was trading at 84.76 as at 19:43 GMT having retraced all its daily gains having opened the day trading at 84.94. The USD/CAD was trading at 1.3489 having opened the day’s session trading at 1.3409.
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