Pickup in Housing Starts Send Dollar Up
A recent report from the US displaying some mending housing statistics was enough to push up the dollar, but the Greenback will shun the spotlight today in favor of Canada, who will release monetary policy meeting notes later today. Ahead of the FOMC decision next week, voting members head into a blackout period.
Though earnings per share metrics reported upon in Yahoo!’s third quarter earnings results yesterday experience a single cent eclipse of expectations, poor forward momentum saw shares fall to close around $32.80. Earnings per share touched $0.08 this quarter, and forward guidance sees quarter four’s sales to be around $920 to $980 million, a far cry from the anticipated $1.33 billion. Later in the after-hours session, the news saw Yahoo! shares fall a slight -1.16%. Current resistance support keeps shares above $31, with a $37 line targeted as next resistance. Lows yesterday were $27.55.
US housing data was both positive and negative, with the former including a 6.5% growth in this month’s housing starts coming alongside numbers from last month that were revised upwards. The reason that news is mixed comes with the reported fall in US building permits of -5.0%, indicated slow growth despite the demand present in the market for new dwellings. However, more positive news is that a low Fed funds rate and accommodating monetary policy has employment in the sector growing steadily, with multi-unit starts seeing a second straight month of increases after the metric initially boomed upwards in June, showing that momentum is sustainable. The dollar grew on the news, with USDJPY posting day four of consecutive gains and closing at 119.832.
The relatively sideways trading of the EURUSD pair in the last few sessions seems to hang precariously on the potential for Mario Draghi, in tomorrow’s monetary policy meeting, to announce a firm plan of action for the ECB’s asset purchasing program. Expectations are divided almost in half, but the most likely things to happen will be a soft verbal talk down of the exchange rate. The current range bound quality of EURUSD has a stubborn resistance around 1.1458 that it has failed to break through on the last two occasions it inched closer. The next resistance, should a talk down see another attempt, would be around 1.16.
Today marks the monetary policy meeting for the Bank of Canada. The current interest rate level of 0.50% is decidedly static, and looks to remain so after the meeting today as well. Easing this decision is the Canadian financial calendar, which has been largely boring lately. Of reports released like yesterday’s wholesale sales data, none have seen steep inclines or declines and have not affected currency much. Sales were a bit disappointing, declining -0.1%. USDCAD has been in a steady near term downtrend after the multi-year highs of 1.335 seen a few weeks ago. Fading FOMC expectations on rate hikes spurred the CAD to gain some ground recently.