USDCAD Consolidates After Breaking Triangle

USDCAD broke out of the triangle last week following the NFP report, where it had been trading for two months. However, in the last two days this pair has been trading in a tight range, as shown by the last two daily candlesticks which look like dojis.

USD/CAD Chart H4 – Pausing Ahead of the FED

Today the Building Permits in Canada showed a jump for April which has had some positive impact on the CAD, but was nothing to change the markets, so I assume we will trade in a range until the US CPI inflation tomorrow and the FOMC meeting. In case of a retreat, the descending line of the triangle comes at 1.37for USD/CAD , which might be a good place to buy on a dip, however, tomorrow’s data will likely induce some huge moves in the USD.

Canada’s April building permits

Key Data Points:

1. Overall Building Permits:
   • April Increase: +20.5%
   • Expected Increase: +2.2%
   • Previous Month: -11.7%
2. Residential Building Permits:
   • April Increase: +21.0%
   • Previous Month: -8.3%
3. Non-Residential Building Permits:
   • April Increase: +19.6%
   • Previous Month: -16.7%
4. Total Permit Value:
   • Value: $12.8 billion
   • Constant-Dollar Basis: Highest since June 2023

The significant increase in April building permits (+20.5%) far exceeded expectations (+2.2%), indicating a robust recovery in construction activity. Both residential and non-residential sectors showed strong growth, with residential permits up by 21.0% and non-residential permits up by 19.6%. This contrasts sharply with the declines seen in March.

The strong increase in residential permits points to renewed momentum in the housing market, which could lead to more housing supply and potential easing of housing market pressures. Non-residential permits’ growth indicates strong business investment in infrastructure and commercial properties, reflecting optimism about economic prospects, however permits are quite volatile to be hones.  When it comes to actual construction it is another thing.

USD/CAD Live Chart