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    In January, Canada’s monthly new housing price index fell 0.4%, missing the 0.1% forecast

    by VT Markets
    /
    Feb 19, 2026
    Canada’s New Housing Price Index fell **0.4%** month over month in January. This was below the expected **0.1% increase**. The data shows new home prices were lower than the month before. It also came in weaker than January forecasts. The **-0.4%** drop was a large miss versus expectations. It suggests high interest rates are starting to hurt demand. This unexpected weakness in a major sector increases pressure on the Bank of Canada to cut rates sooner than expected. We now see a higher chance of a rate cut before the summer. This outlook is bearish for the Canadian dollar. If rates fall, the currency often becomes less attractive to foreign investors. We see an opportunity in **buying USD/CAD call options**, aiming for a move toward **1.3800** in the coming weeks. This view is supported by Canada’s latest inflation data for January 2026, which eased to **2.8%** and strengthens the case for the Bank to act. Traders should also watch interest rate derivatives that reflect expectations for the Bank of Canada’s policy rate. Positioning for lower yields ahead of the **March 5** central bank meeting could pay off. Looking back at 2025, this would be a clear shift from the Bank’s hawkish stance that year, when it kept rates unchanged to fight stubborn inflation. Housing weakness often comes before a wider slowdown. It can also weigh on Canadian banks and real estate-linked stocks. We are considering **put options on financial sector ETFs** as a hedge against declines in these rate-sensitive names. This fits with recent CMHC data showing housing starts fell **more than 10% year over year** in the final quarter of 2025, suggesting the slowdown is not a one-off.

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