USD/CAD regains ground as Canadian housing starts drop to a 9-month low

The loonie, as the Canadian dollar is best known, declined against its US counterpart, after a report revealed the Canadian housing starts increased at the slowest pace since May 2013.

USD/CAD reached a session high at 1.1052 at 13:44 GMT, after which consolidation followed at 1.1046, adding 0.12% for the day. Support was likely to be received at February 7th low, 1.0969, while resistance was ti be met at February 7th high, 1.1079.

The Canadian Mortgage and Housing Corporation reported today that the housing starts in the country rose to 180 248 in January, trailing analysts estimates of an increase to 185 000. Januarys reading was the lowest number of housing starts since May 2013, while also adding to bearish sentiment, Decembers figure was downward revised to 187 100, from initial estimates of 189 672 newly-started residential buildings.

However, losses were limited as loonies demand continued to be supported by better-than-expected Canadian economic data, which was released on Friday.

Statistics Canada reported on Friday that 29 400 more Canadians were hired in January, which outstripped analysts’ projections of 20 000 newly-hired employees. The data came after employers hired 44 000 fewer people in December. The increase was mainly driven by more full-time added jobs, whose number advanced to 50 500 in January, after a slump of 56 000 in the previous month. The increase in full-time positions offset a drop in part-time jobs, whose figure declined by 21 100, after a 12 100 gain a month ago.

A separate report revealed that the Canadian unemployment rate reached 7% in January, exceeding analysts’ expectations of a drop to 7.1% and after December’s reading of 7.2%.

Meanwhile, the greenback came under heavy selling pressure on Friday after a report by the US Department of Labor revealed the non-farm payrolls in the country increased by 113 000 in January, well below experts’ forecasts of an increase to 180 000 and after US employers added 75 000 jobs a month ago, the smallest change since January 2011. Data showed that the small number of added jobs in January was driven by retailers and government agencies as they have cut payrolls at the fastest pace in more than a year, while at the same time construction companies and manufacturers boosted employment.

The lower-than-expected number of non-farm payrolls raised concerns over the uneven recovery of the US economy and fueled speculations that Fed may slow the pace of scaling back stimulus.

However, a separate report revealed the US unemployment fell to 6.6% in January, while analysts projected the jobless rate will remain steady at December’s 6.7% rate. Although data showed that more Americans entered the workforce, the unemployment rate reached the lowest level since October 2008. Nonetheless, the number of people participating in the labor market rose by mere 0.2% to reach 63% in January, rebounding from 62.8%, the the weakest participation rate in almost 30 years, registered in the previous month.

Elsewhere, EUR/USD hit a session high at 1.3651 at 08:35 GMT, after which the pair traded little changed at 1.3633 at 12:58 GMT, losing 0.01% for the day. Support was likely to be received at February 7 low, 1.3553, while resistance was to be met at January 30 high, 1.3662.