US Housing Starts Fall to 18 Month Low

Although building permits rose significantly during the month of September, climbing 6.30% month over month after contracting -0.40% in August, the losses in housing starts were substantial.  According to figures released by the US Department of Commerce, multi-family housing units plunged by 38.00% month over month while single-family homes managed to bounce back from August losses.  Building activity has fallen to the lowest levels in 18 months, helped in large part by the falling inventory of existing homes.  Data relating to existing home sales is set to be released later in the session, however, the Federal Reserve remains upbeat on the figures as evidenced by comments on construction published yesterday in the release of the Central Bank’s Beige Book.  The US dollar is starting to rebound, evidenced by the upward momentum in USDMXN, since erasing most of the post-debate losses.

As was widely expected, the Bank of Canada opted to leave interest rates unchanged at its latest meeting, keeping the key rate on hold at 0.50%.  Despite hopes that the weaker Canadian dollar would help stimulate the export market, policymakers have been underwhelmed by the results.  Officials are also downbeat on the outlook, with Central Bank revising lower its growth forecast for 2016 from 1.30% to 1.10%, reflecting the challenges posed by exports and certain fiscal policy measures.  Governor Stephen Poloz admitted that policymakers were very close to cutting rates by an additional 0.25% during the latest decision, but were dissuaded by the level of uncertainty in the economy and the ongoing “balance of risks.”  The Canadian dollar continues to cede ground, with USDCAD climbing over 100 pips off of Wednesday lows before continuing momentum higher during Thursday trade.