USD/CAD regains ground following the upbeat US housing data

Having touched daily lows earlier, US dollar regained some ground against its Canadian counterpart on Tuesday, following the release of positive housing data out of the United States.

USD/CAD touched a session high at 1.0554 at 14:30 GMT, after which consolidation followed at 1.0550, gaining 0.07% for the day. Support was likely to be received at November 22nd low, 1.0516, while resistance was to be encountered at November 25th high, 1.0583.

Earlier in the day it became clear, that demand for building permits in the United States increased considerably in October, reaching its highest level in more than five years, which suggested that construction activity in the country was expanding during the third quarter of the year. The number of permits rose 6.2% in October compared to September to reach 1.034 million units, after another 5.2% climb to 0.974 million units in the preceding month. Experts had anticipated that the number of permits will fall to 0.935 million units in October. Last months increase rate appears to be the strongest since June 2008. In annual terms, the number of building permits rose 13.9% in October. This indicator usually provides clues over future activity in the construction sector in the country.

In addition, according to a report by S&P and Case-Shiller, home prices in worlds largest economy rose significantly during the third quarter of the year and especially in the Western part of the United States. The index, gauging home prices in all states, climbed 3.2% in Q3 on a quarterly basis and 11.2% compared to Q3 a year ago. The annualized rate of increase was the largest since the housing boom back in 2006. At the same time, the index, tracking prices of homes in 20 large US cities, advanced 13.29% in September 2013 compared to September 2012, exceeding preliminary estimates of a 12.97% gain. Homes were most expensive again in Las Vegas, as the index of prices jumped at an annualized rate of 29.1% in September, while in San Francisco home prices rose 25.7% during the same period.

“You’ll see the loonie react to news of the day, but the loonie is on its down trend,” David Doyle, a strategist at Macquarie Capital Markets, said by phone from Toronto, cited by Bloomberg. “That’s simply because the U.S. economy should outperform the Canadian economy over the next year or so.”

Meanwhile, the loonie, as Canadian dollar is also nicknamed, plunged to lows unseen in more than four months against the greenback on Monday, as the price of crude oil, nation’s largest export, declined after a deal has been reached between Iran and major world powers, which imposes limits to Iranian nuclear program.

The Canadian currency has depreciated 5.7% during this year against the greenback, as Bank of Canada Governor Stephen Poloz has indicated that the bank might probably reduce its benchmark interest rate in order to spur nations economic recovery, while the Federal Reserve Bank intends to trim the monthly pace of its monetary stimulus, as has been speculated for some time.

Elsewhere, the Canadian dollar was losing ground against the euro, with EUR/CAD cross up 0.20% on a daily basis to trade at 1.4283 at 15:08 GMT. GBP/CAD pair was gaining 0.21% to trade at 1.7073 at 15:10 GMT.