The Canadian dollar held its own on Monday, and despite a strong rally during the Euroepan trading session, USD/CAD ultimately closed down very slightly just above support at 1.1150. Canadian economic data was surprisingly strong, as Canada Mortgage and Housing Corp. reported that housing starts jumped by 9.2 percent in May to an annualized pace of 128,400 units from a 13-year low of 117,600. The result adds to the mixture of indicators that offer a clouded view of growth in the nation as the economy contracted by 5.39 percent in Q1, the sharpest drop in 18 years. Meanwhile, the Canadian employment and the Ivey Purchasing Managers’ Index showed strong gains in April, only to fall back in May to reflect deterioration in both the labor markets and business activity. Ultimately, the Canadian economy may still be fairly weak, but it’s looking like the recession bottomed during Q1, offering fundamental support for the Canadian dollar.
Related Article: Canadian Dollar Weekly Trading Forecast
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