US dollar edged higher against its Canadian counterpart on Wednesday, before the Federal Reserve makes a decision whether to reduce its monetary stimulus, which has increased demand for high-risk assets.
USD/CAD touched a session high at 1.0313 at 13:01 GMT. Support was likely to be found at September 16th low, 1.0283, while resistance was to be met at September 12th high, 1.0335.
Canadian dollar retreated against the greenback for the first time in three trading days, as Federal Reserve policymakers were holding a two-day meeting. 33 out of 64 economists in a Bloomberg survey project that the US central bank will reduce its purchases of Treasuries by 5 billion USD or less and 31 forecast a cut of 10 billion USD or more. “The loonie’s going to weaken by a percent to a percent and a half” following the policy decision, Greg Anderson, the New York-based head of global foreign exchange strategy at BMO Capital Markets, said in a telephone interview, cited by Bloomberg.
Meanwhile, in the United States, housing starts increased in number during August, suggesting that development in the sector was continuing, despite some recent signals that demand was weakening. Housing starts rose by 0.9% in August compared to July, reaching the annual 0.891 million units, while expectations pointed a number of 0.917 million units. This indicator has been supported mainly by better results, regarding single-family house construction, which is usually considered as a more reliable gauge for the development of the housing market, than multi-family house construction, which recorded a slight drop. Housing starts indicator has demonstrated certain volatility during the past months, but yet a steady rate of increase, as it might prove to be one of the key factors to drive economic recovery. However, other set of data showed that demand for houses was slowing down, following the formidable increase in prices, while mortgage rates bounced from their historic lows.
In addition, US building permits increased less than expected in August, reaching 0.918 million units, instead of 0.950 million, while in July the number of permits has been revised up to 0.954 million units from 0.943 million units previously.
Elsewhere, the loonie, as Canadian dollar is also known, was almost unchanged against the euro, with EUR/CAD cross dipping a mere 0.01% today to trade at 1.3757 at 14:47 GMT. GBP/CAD pair, on the other hand, was advancing 0.54% on a daily basis to trade at 1.6467 at 14:49 GMT.
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