The Canadian dollar surged against the US dollar on Wednesday, as investors felt more optimistic in the wake of the best Canadian housing data in two months. The loonie also rose against the British pound following a fresh scandal within the British government, which hurt tradersâ demand for the British currency.
Canadaâs Mortgage and Housing Corporation stated in a report that was released earlier today that the number of housing starts unexpectedly rose in October. The month saw a seasonally adjusted increase in housing starts to 222,771 units, up from 219,293 units in September. Economists had expected housing starts to decline to 210,000.
The increase was mainly due to a 12.5% gain for multiple urban starts, which canceled out a 17.1 drop in single urban starts. The number of housing starts in October was the highest since August, continuing a trend of steady growth in 2017 despite a drop in September. The report also revised Septemberâs number slightly higher.
The total gain over the last 12 months in multiple starts is the highest since 1990, which reflected strong homebuilding activity in Canada due to solid demographic support.
A separate report by Statistics Canada revealed an increase in building permits that surprised investors. The value of Canadian building permits jumped 3.8% in September to end three months of declines, despite expectations of a 0.2% drop. The Canadian dollar surged against most of its major peers following these two reports.
The increase was mainly due to a higher permits activity for the nonresidential sector, which saw a 13.9% climb mainly due to a permit for a new hospital in Alberta. On the other hand, permits in the residential sector declined 1.7% in September for the third month in a row. Lower construction planning for apartments in Ontario was the main drag for the residential sector.
Since there is often a gap between permit issuance and project starts, the data from Statistics Canada suggested that the number of housing starts may slow down later this year.
The Canadian dollar gained more ground against the British pound today as reports of a scandal within UK Prime Minister Theresa Mayâs cabinet emerged. Secretary of International Development Priti Patel reportedly met with Israeli officials in September. Two meetings were held and were kept secret from the prime minister despite Patel supposedly telling everything there is to tell to May on Monday.
USD/CAD traded at 1.2733 as of 15:15 GMT on Wednesday after falling to 1.2723 at 12:50 GMT, the pairâs lowest level for the day. USD/CAD began trading today at 1.2765. GBP/CAD was at 1.6674 from 1.6660 at 13:30 GMT, a level last seen on October 25. GBP/CAD started the day at 1.6813.
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