CAD still trying to push higher - not easy
In a session light on data, traders will be feeding off scraps until the next round of major US numbers are upon us. Today's data schedule saw the UK jobs report released this morning but in a cloud of Brexit uncertainty. This afternoon, however, Canadian housing starts and building permits are the only stats on the docket, with both coming in better than forecasts to add to the heavy tone in USD/CAD.
For July, building permits have risen by 3%, compare to forecasts of 2.3%, but this was coming off the back of a poor June, where we saw a drop of 3.1. Forward a month, and August housing starts rose by 226.6k vs 215k expected, adding to the 222.5k in July. On balance, the numbers are good enough to keep the CAD elevated, and certainly coming off the back of the strong jobs report last Friday. We also had the BoC content with current policy levels, so there is room for USD/CAD to test a little lower, but it seems conviction is on the light side.
When looking across the board, the mood is very much of a market which is reluctant to ditch the USD completely. Some of the recent data has clearly taken its toll on the greenback, but after the turnaround from Monday week, it seems traders are still in the habit of maintaining some level of USD exposure on their books.
USD/CAD support around the 1.3150 area has provided some congestion to the downside as we anticipated, but much stronger levels kick in in the mid 1.3050's, though it seems there is not enough momentum to generate a move to these levels as yet. Markets may liven up once North American traders are left to themselves later on, as European markets have become extremely sticky in recent months.