Yesterday’s trade saw USD/CAD within the range of 1.3314-1.3399. The pair closed at 1.3399, up 0.46% on a daily basis, while extending gains from Friday. The daily high has been the highest level since September 24th, when the cross registered a high of 1.3418, or a level unseen since June 30th.
At 8:34 GMT today USD/CAD was gaining 0.10% for the day to trade at 1.3411. The pair overshot the range resistance level (R3), as it touched a daily high at 1.3432 at 7:00 GMT. It is now the new highest level since June 30th.
Today the cross may be influenced by a number of macroeconomic reports as listed below.
Fundamentals
United States
CB Consumer Confidence Index
Confidence among consumers in the United States probably worsened in September, with the corresponding index coming in at a reading of 96.0, according to expectations, from 101.5 in August. The latter has been the highest index value since January, when the gauge was reported at 103.8.
This indicator measures the level of individuals confidence in the US economic development. It is considered as a leading indicator, as it gives an early insight into consumer spending, which accounts for most of the nations GDP.
The index has 1985 as a base year, when the base value was 100. This year was chosen, as it was neither a peak nor a bottom. The Consumer Confidence Index (CCI) is calculated on the basis of a household survey, which reflects consumers opinion on current conditions and future expectations regarding the US economy. Opinions on current conditions account for 40% of the index, while expectations of future conditions account for the remaining 60%. The surveys objective is to define consumer attitudes and buying intentions, while the data are filtered by age, income and region.
A sample of 5 000 households in the United States serves as a basis for the survey. Each month respondents give their opinion based on the answers to five questions: Current business conditions; Business conditions for the next six months; Current employment conditions; Employment conditions for the next six months; Total family income for the next six months. Respondents may answer each question as “positive”, “negative” or “neutral”.
Each of the five questions is given a “relative value”, or the positive responses are divided by the sum of the positive and negative responses. The relative value is then compared against each relative value from the base year (1985). The comparison of the relative values leads to the “index value” for all five questions. These index values are then averaged in order to form the value of the CCI.
In case the index fell more than anticipated, this would have a moderate bearish effect on the US dollar, as lower confidence suggests a lower willingness to spend and, respectively, a slower economic growth. The Conference Board research group is to publish the official index reading at 14:00 GMT.
Canada
Producer Prices
Prices of industrial products in Canada probably dropped for the first time in four months in August, down at a monthly rate of 0.4%, according to expectations. In July prices were up 0.7%, or at the sharpest monthly rate since February 2015, when a 1.8% surge was reported. This index measures the change in prices of industrial goods, sold by manufacturers in the country. It is also used as an indicator of commodity inflation. In case of a larger-than-anticipated decrease in prices, this would have a limited bearish effect on the local dollar, as the latter tends to be sensitive to changes in commodity prices. Statistics Canada is to release the official data at 12:30 GMT.
Bond Yield Spread
The yield on Canadian 2-year government bonds went as high as 0.544% on September 28th, after which it slid to 0.506% at the close to lose 3.6 basis point (0.036 percentage point) compared to September 25th.
The yield on US 2-year government bonds climbed as high as 0.715% on September 28th, after which it fell to 0.676% at the close to lose 2.4 basis points (0.024 percentage point) compared to September 25th.
The spread between 2-year US and 2-year Canadian bond yields, which reflects the flow of funds in a short term, expanded to 0.170% on September 28th from 0.158% on September 25th. The September 28th yield difference has been the largest one since September 24th, when the spread was 0.178%.
Meanwhile, the yield on Canadian 10-year government bonds soared as high as 1.530% on September 28th, after which it closed at 1.445% to lose 8 basis points (0.08 percentage point) compared to September 25th.
The yield on US 10-year government bonds climbed as high as 2.169% on September 28th, after which it slipped to 2.098% at the close to lose 6.8 basis points (0.068 percentage point) compared to September 25th.
The spread between 10-year US and 10-year Canadian bond yields widened to 0.653% on September 28th from 0.641% on September 25th. The September 28th yield difference has been the largest one since September 24th, when the spread was 0.659%.
Daily and Weekly Pivot Levels
By employing the Camarilla calculation method, the daily pivot levels for USD/CAD are presented as follows:
R1 – 1.3407
R2 – 1.3415
R3 (range resistance – green on the 1-hour chart) – 1.3422
R4 (range breakout – red on the 1-hour chart) – 1.3446
S1 – 1.3391
S2 – 1.3383
S3 (range support – green on the 1-hour chart) – 1.3376
S4 (range breakout – red on the 1-hour chart) – 1.3352
By using the traditional method of calculation, the weekly pivot levels for USD/CAD are presented as follows:
Central Pivot Point – 1.3309
R1 – 1.3445
R2 – 1.3554
R3 – 1.3690
S1 – 1.3200
S2 – 1.3064
S3 – 1.2955