Hot Canadian Inflation & US Housing: USDCAD

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Canada’s CPI got on 4.8% Pace in December from the growth rate of 4.7% in November. CPI fell 0.1% after gaining 0.2% in November. The average of the three core CPI measures of the BoC was 2.9% in December compared to 2.8% in November. Key annualized trimmed CPI reading rose 3.7% from expectations of an “unchanged” reading at 3.4%. Prices increased year-on-year for all eight major components in December. Transportation and accommodation prices were the main contributors to CPI growth.

Year-on-year, prices for services (+3.4%) increased more in December than in November (+2.9%). Goods prices (+6.8%) increased slightly more slowly than in November (+6.9%), which dampened the rise in CPI prices.

Gasoline prices rose less sharply in December (+33.3%) than in November (+43.6%), which contributed to the slowdown in commodity prices.

US living begins rose 1.4% to 1.702 million in December much better than expected especially after jumping 8.1% to 1.678m in November and rising slightly by 0.1% to 1.552m in October.

Launches hit a 15-year high of $1.725 million in March. All of the month’s strength was in the multi-family sector, where starts rose 10.6% to 0.530m from a 0.2% rise to 0.479m.

Single-family home starts fell -2.3% to 1.172m. down from an 11.6% increase to 1.199 million previously. Housing starts rose 2.3% to 1.519m from a previous 1.4% increase to 1.485m.

But housing completions fell -8.7% to 1.295m after rising 13.0% in November 1.418 million had risen. permits up 9.1% to 1.873 million after rising 3.9% to 1.717 million in November and a 15-year high of 1.883 million last January.

The data rose USDCAD below to test last week’s low 1.2450 zone and a new 10-week low. The rally in the oil market has supported CAD for the past 5 weeks as USDCAD has been touched 1.2960 and US oil was tested under $66.00 a barrel.

Today USOil has broken through $87.00. 1.2500 remains the main psychological level, representing both support in the higher timeframes (200-day moving average) and resistance in the lower timeframes (20-hour moving average).