Statistics Canada announced today that the value of building permits fell 6.7% in November, the first decline in three months, and a bigger fall than expected (a Reuters poll of economist had pointed to a 3% drop), while housing starts decreased to an annualised, seasonally-adjusted rate of 189,672 in December from the 197,797 seen in the previous month.
After Bank of Canada Governor Stephen Poloz said earlier this week that he is under no pressure to raise interest rates, and that the central bank has ‘some room to manoeuvre,’ there has been growing speculation that an interest rate cut could be on the cards, depending on how the Canadian economy performs. Today’s disappointing data plays into that scenario, meaning that tomorrow’s employment data looks all the more crucial.
Both the US and Canada report on their labour markets tomorrow. Canada’s labour force survey is expected to show a substantial drop in the number of those in employment. A Bloomberg survey gives a consensus forecast of 14,100 for December Canadian employment, compared to the 21,600 reported for November. US non-farm payroll growth for December is forecast to slow, with a Reuters poll showing a median estimate of 196,000, which would be down on the 203,000 seen in November.
By mid-afternoon in New York, USD/CAD had risen 0.42% to 1.0865, after touching as high as 10876.5 earlier in the session, the highest the US dollar has been against the Loonie since October 2009.