The Canadian Building Permits indicator measures the change in the number of new building permits issued. It is one of the most important indicators of the construction sector. A reading that is higher than the market prediction is bullish for the Canadian dollar.
Here are all the details, and 5 possible outcomes for USD/CAD.
Published on Tuesday at 12:30 GMT.
Strong growth in new building permits indicates an expanding construction sector, which in turn is a critical component of economic growth. Conversely, negative readings indicate a contracting construction industry.
The indicator has been erratic, posting two sharp declines prior the March release, which showed a gain of 1.7%. The markets are expecting a strong release in April, with an estimate of 5.3%. Will the market meet or beat the estimate?
Sentiments and levels
Late last week, the markets were treated to dismal employment numbers out of both Canada and the US. The very disappointing jobs report in Canada erased the gains of the previous report and cast a shadow over the loonie’s strength. However, also in the US, the Non-Farm Payrolls gain was very disappointing, so the chances of QE are reduced now. All in all, the pair could maintain its current balance. So, the overall sentiment on USD/CAD is neutral towards this release.
Technical levels, from top to bottom: 1.0340, 1.03, 1.0250, 1.0180, 1.0180, 1.0125 and 1.01.
- Within expectations: 4.8% to 5.8%: In such a case, the USD/CAD is likely to rise within range, with a small chance of breaking higher.
- Above expectations: 5.9% to 6.4%: An unexpected higher reading can send the pair well below one support line.
- Well above expectations: Above 6.4%: The chances of such a scenario are low. Such an outcome would push down USD/CAD, and a second support line might be broken as a result.
- Below expectations: 4.2% to 4.7%: A sharper decrease than forecast could cause the pair to drift and break one level of resistance.
- Well below expectations: Below 4.2%: Given the recent downward trend in the index, a further decline is a possibility. In this scenario, the pair will fall and could break a second resistance level.
For more about the loonie, see the USD to Canadian dollar forecast.
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