Here are the key factors to keep in mind today for US Dollar trades:

• US Housing Starts and Building Permits: Forex traders will receive some important data on the health of the US housing market today. Housing starts are expected to increase by 7.0% in June to 1,109,000 units and building permits are expected to decrease by 8.0% to 1,150,000 units. This would be a reversal from May where housing starts plunged by 11.1% to 1,036,000 units and building permits rose by 11.8% to 1,275,000 units. Despite the expected increase in housing starts, the two month average still points towards a contraction of 2.0% per month which is a bearish sign for the US economy. The housing sector plays a key role in consumer confidence and directly impacts consumer spending.
• US CPI: Economists expect a minor increase in inflationary pressure on the consumer level. The CPI is expected to rise by 0.3% in June month-over-month and by 0.1% year-over-year. This can be compared to the 0.4% increase which was reported in May monthly and the annualized flat reading. The core CPI, which excludes food and energy, is expected to rise by 0.2% in June month-over-month and 1.8% year-over-year. This compares to the 0.1% increase reported in May monthly and the annualized increase of 1.7%. The US Fed stated that an interest rate hike could be in store as soon as this year, but with deflationary pressure causing concern it is highly unlikely that there will be an increase in interest rates any time soon.
• US University of Michigan Consumer Confidence: The final economic report out of the US which can have an impact on the US Dollar will be the University of Michigan Consumer Confidence Index which is expected to decrease by 0.1 point to 96.0 in July from the 96.1 which was reported in June.

Here is the key factor to keep in mind today for Canadian Dollar trades:

• Canadian CPI: After the Bank of Canada cut interest rates down to 0.50% the CPI reports over the next few months will gather even more attention. Today’s CPI report is expected to show an increase of 0.2% in June month-over-month and 1.0% year-over-year. Forex traders can compare this to the 0.6% increase which was reported in May monthly and the 0.9% increase annualized. The core CPI excluding food and energy is expected to increase by 0.3% month-over-month and 2.2% year-over-year. This can be compared to the 0.4% increase reported in May monthly and the annualized increase of 2.2%.

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