Summary:

• US Building permits beat forecasts
• Housing starts also rise and beat expectations
• USD looking to recover from recent weakness

The latest data from the US housing market has come in better than expected with both building permits and housing starts beating forecasts. The November reading for building permits showed 1.30M against consensus expectations for 1.27M and the prior reading of 1.32M (revised higher from 1.30M). 

 Despite these metrics rising in the most recent release, the longer term trend is still lower to flat. Source: XTB Macrobond

The number of housing starts, also for the month of November, was also pleasing with 1.30M seen here. This was above the 1.25M expected and the 1.26M prior (revised lower from 1.29M). 

The US dollar has been under some pressure in the past week despite the Fed raising rates for the third time this year. The market has fallen back to test the bottom of the Ichimoku cloud on D1 around the 93 handle, but there has been some support found here. This was also the case back in October and November when the market tested the cloud and it will be interesting to see if longs can defend the level once more.  

 The USDIDX has fallen back to the bottom of the D1 Ichimoku cloud bbut found some support around the 93.00 mark. Source: xStation

In terms of individual USD crosses the USDCAD is at a particularly interesting point (We earlier analysed the EURUSD here) with the price not far form a 5-month high. This pair has seen some of the biggest gains for the US dollar in recent months but the 1.29 handle has provided a ceiling on several occasions. A reversal signal around here could be seen to provide an attractive short opportunity but a break up above 1.29 could see a sustained move to the upside as part of a breakout rally. 

 

 USDCAD is retesting prior resistance around 1.29. The price action around here could prove pivotal in determining the next move. Source: xStation