More Wild Over Optimism: Canadian Housing

• By David Goodboy
• On 10:16 am EST, Friday November 6, 2009

David Goodboy is Vice President of Business Development for a New York City based multi-strategy fund.

The Event:

At 8:15 AM EST on Monday, November 9th, the Canada Mortgage and Housing Commission (CMHC) releases its monthly new house starts. Simply stated, this is the new residential construction started during the previous month.

Description:

The figure is monthly data but it is presented in a yearly format, meaning it is the figure times twelve. An upward trending series of months is thought to reflect a robust and growing economy, as new home owners are major buyers of goods and services which stimulate growth. Downward trending monthly numbers indicate potential future retraction and slowing in the economy. In addition, beating analyst's estimates is considered positive; lagging the estimates is a negative sign. Both can lead to short term reaction in the USD/CAD pair.

Trader Take:

This figure has been stalled at 150k for the last 2 releases. This month is expected to be 157k. I believe this is overly optimistic and the actual number will miss. However, no one really knows for sure. Be ready for anything and possibly a severe reaction in the Loonie.

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