ASIA: Coming Up In Asia Pac Markets On Friday

Housing starts remained steady at 279.5k annualized in May (280.2k prior), remaining near 2-year highs for a second consecutive month and defying expectations for a sharp drop to 247.5k. Alongside this, existing home sales picked up in May by 3.6% (0.1% prior, no consensus), the strongest rise since October 2024. Sales-to-new listings ticked up 0.2pp to 47.0%, a 3-month high, with months of inventory dipping 0.1 to 4.9.

• The CREA expressed cautious optimism: “It’s only one month of data, and one car doesn’t make a parade, but there is a sense that maybe the expected turnaround in housing activity this year was just delayed for a few months by the initial tariff chaos and uncertainty.”
• However sales remain below levels seen throughout most of the last 3 years, not to mention the pandemic boom. And the aggregate HPI composite price benchmark however fell $1.5k to $690.9k, the 5th consecutive decline for a fresh post-May 2021 low (and a 3.7% Y/Y drop, now 17.2% from peak).
• The jump in housing starts is also due to strong gains in urban multifamily housing (34% rise in April, 1% in May), with urban single starts soft. And building permits remain a weak point, dropping 6.6% M/M and 14.0% Y/Y in April, boding poorly for future activity.
• The BOC's latest meeting deliberations noted that while "Housing activity and government spending had declined...they expected some support going forward from new housing policies", presumably including a GST rebate for first time homebuyers. 

• RES 4: 1.4200 Round number resistance
• RES 3: 1.4111 High Apr 4
• RES 2: 1.3850/1.4016 50-day EMA / High May 12 and 13
• RES 1: 1.3717 20-day EMA
• PRICE: 1.3594 @ 15:52 BST Jun 17
• SUP 1: 1.3540/3521 Low Jun 16 / 1.0% 10-dma envelope
• SUP 2: 1.3503 1.618 proj of the Feb 3 - 14 - Mar 4 price swing
• SUP 3: 1.3473 Low Oct 2 2024
• SUP 4: 1.3410 1.764 proj of the Feb 3 - 14 - Mar 4 price swing

The trend needle in USDCAD continues to point south and fresh cycle lows last week and again on Monday, reinforce a bearish theme. Support at 1.3686, the May 26 low and a bear trigger, has been cleared, confirming a resumption of the downtrend. This maintains the price sequence of lower lows and lower highs. Sights are on 1.3521 next, envelope-based support. Resistance at the 20-day EMA is at 1.3732.

• Rising Middle East tensions included chances the US will join the war lent to the second half risk-off support for Treasuries Tuesday. Otherwise, markets await Wednesday's FOMC policy announcement including a Summary of Economic Projections (Dots).
• Pres Trump: "We know exactly where the so-called “Supreme Leader” is hiding. He is an easy target, but is safe there - We are not going to take him out (kill!), at least not for now. But we don’t want missiles shot at civilians, or American soldiers. Our patience is wearing thin. Thank you for your attention to this matter!"
• We expect that the June FOMC meeting communications will reflect an increasingly patient attitude since May and certainly since March’s projections.
• Cross asset update: stocks ebbed in the second half (SPX eminis -44.75 at 6045.0), West Texas crude climbed to early July 2024 highs (WTI +3.39 at 75.16), while Bbg US$ index climbed to June 11 highs (BBDXY +6.43 at 1209.02).
• Tsy Sep'25 10Y futures trades +12.5 at 110-28 vs. 111-00 high, below key resistance and its recent high of 111-14+, a Fibonacci retracement and the Jun 5 high. Clearance of this hurdle would be bullish and highlight a stronger reversal. This would open 111-30, a Fibonacci retracement.
• Curves flatter, 2s10s -4.250 at 43.309, 5s30s -1.837 at 90.209. 10Y yield at 4.3849% vs. 4.3770% low.