On Wednesday, the dollar edged lower than the Loonie and weaker against most major currencies. The move comes despite stronger than expected housing data. Traders took profits on their short-positions in Treasury yields, allowing the curve’s long end and short end to ease. In December, U.S. building permits jumped 9.1% as pend up demand buoyed housing starts.
The USD/CAD edged lower and is hovering just below the 200-day moving average which was former support. Resistance is seen near the 10-day moving average at 1.2570. The 10-day moving average crossed below the 50-day moving average, which means a short-term downtrend is in place. Short-term momentum has turned negative as the fast stochastic generated a crossover sell signal. The exchange rate is oversold as the fast stochastic prints a reading of 11, below the oversold trigger level of 20. Medium-term momentum has turned negative as the MACD (moving average convergence divergence) index generated a crossover sell signal. This scenario occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses above the MACD signal line (the 9-day moving average of the MACD line). The MACD histogram is printing in negative territory with a downward sloping trajectory which points to a lower exchange rate.
Building Permits Surge
Permits for future homebuilding jumped 9.1% to a rate of 1.873 million units in December. Permits for buildings with five units or more soared 19.9% to a rate of 675,000 units. Single-family building permits rose 2.0% to a rate of 1.128 million units. Housing starts rose 1.4% to a an annual rate of 1.702 million units last month, the highest level since March.