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    Canada’s housing starts in August were 245.8K, below the forecast of 277.5K.

    by VT Markets
    /
    Sep 16, 2025
    Canadian housing starts for August 2025 reached 245,800 units, falling short of the expected 277,500 units. In July, housing starts were at 294,100 units, indicating a decline in the latest report. This new data shows a drop compared to both expectations and the previous month.

    Significant Decline in Housing Starts

    The August housing starts figure is a major disappointment. It represents a sharp decline from July and is far below expectations. This indicates that high interest rates are significantly impacting Canada’s construction sector. This trend may signal a larger economic slowdown. This weak data changes the outlook for the Bank of Canada’s monetary policy. Just last week, the BoC maintained its policy rate at 4.75% due to persistent inflation. However, this report raises the likelihood of a rate cut happening soon. The market is now expecting this shift to occur earlier than anticipated. This situation may increase bearish sentiment about the Canadian dollar among currency traders. We could explore strategies to benefit from a weaker CAD, such as buying USD/CAD call options or selling CAD futures. Following this news, the loonie has fallen below 0.7250 against the U.S. dollar, a level not seen since early this year.

    Impact on Interest Rates and Equities

    In interest rate markets, this data suggests that yields may have peaked. Traders should consider positioning for lower rates by buying futures on Canadian government bonds, anticipating price increases. Derivatives tied to the CORRA rate are likely to see more activity as traders bet on a potential rate cut in the first half of 2026. This slowdown in housing is a negative sign for rate-sensitive equities, especially in financial and real estate sectors. We might consider buying put options on Canadian bank ETFs and REITs, as these are directly affected by a weakening housing market. This trend mirrors what happened in 2023 when these sectors struggled as the initial rate hikes made their impact felt. Create your live VT Markets account and start trading now.

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