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Another weak housing figure from Canada helps stall the C$’s recovery. Building permits fall 11.6% in February, far worse than expected. Canadian building permits were expected to drop by 2.4% in February after a leap of 8.1% in January (revised down from +8.5%). This is a volatile indicator, but nevertheless, it has a strong impact on the loonie.

USD/CAD was initially trading lower, dipping below 1.0920 on the greenback’s general weakness. However, the poor housing starts figure helped it recover to around 1.0925 just before the publication. USD/CAD is now moving towards 1.0940.

In the bigger scheme of things, USD/CAD is still on low ground. The chart shows this clearly:

USDCAD higher on weak Canadian building permits April 8 2014 technical 30 minute chart

It is still to be seen if this is a real recovery or a “dead cat bounce”.

Earlier, Canadian housing starts disappointed badly with a drop to 156.8K. They were expected to edge up to an annualized level of 193K in March after 192K in February.

USD/CAD was struggling with 1.10 throughout last week and only the release of the excellent Canadian employment numbers allowed the pair to fall below this round number.

Further levels below are 1.0850 and 1.0780. On the topside, 1.10 is obvious resistance, followed by 1.1070. For more levels, see the Canadian $ forecast.