Forex Market: USD/CAD daily trading forecast

Yesterday’s trade saw USD/CAD within the range of 1.3215-1.3334. The pair closed at 1.3268, down 0.35% on a daily basis and extending losses from Wednesday. The daily low has been the lowest level since September 22nd, when a low of 1.3215 was registered.

At 8:26 GMT today USD/CAD was losing 0.27% for the day to trade at 1.3236. The pair touched a daily low at 1.3224 at 7:35 GMT, while trading in the area close to the range support level (S3) in the past few hours.

According to Binary Tribunes analysis on historical volatility, the average intraday volatility for the pair was 0.744% in September, or the lowest since December 2014, when average volatility was estimated at 0.696%. Within the period January 2013-September 2015, the highest average intraday volatility was seen in February 2015, or 1.205%. At the same time, the average daily volatility for USD/CAD was 0.800% in September, or the lowest one since December 2014. Back then the average daily volatility was estimated at 0.788%. Within the period January 2013-September 2015, the highest average daily volatility was seen in January 2015, or 1.431%.

Today the cross may be influenced by a number of macroeconomic reports as listed below.

Fundamentals

United States

Non-farm Payrolls, Unemployment rate, Average Hourly Earnings

Employers in all sectors of economy in the United States, excluding the farming industry, probably added 203 000 new jobs in September, according to the median forecast by experts, after a job gain of 173 000 in August. The latter has been the lowest figure since March 2015, when 126 000 new jobs were added.

Employment in health care and social assistance increased by 56 000 jobs in August, while financial activities sector added 19 000 jobs. Employment in professional and business services continued to trend up, adding 33 000 jobs in August, as well as the food services and drinking places segment, where 26 000 positions were added. On the other hand, manufacturing employment shrank by 17 000 in August, while mining employment dropped by 9 000, according to the report by the Bureau of Labor Statistics (BLS).

The non-farm payrolls report presents the total number of US employees in any business, excluding the following four groups: farm employees, general government employees, employees of non-profit organizations, private household employees. The reading, released most often, varies between 10 000 and as much as 250 000 – 300 000 at times when economy is performing well. Despite the volatility and the possibility of large revisions, the non-farm payrolls indicator presents the most timely and comprehensive reflection of the current economic state. Total non-farm payrolls account for 80% of the workers, who produce the entire Gross Domestic Product of the United States. In case of a larger-than-expected gain in jobs, the US dollar would certainly be boosted.

Average Hourly Earnings probably increased for a third consecutive month in September, going up 0.2%. In August earnings rose 0.3%, or at the fastest monthly rate since May, when they grew 0.3%.

The rate of unemployment in the country probably remained steady at 5.1% in September, according to expectations. It has been the lowest level since April 2008, when a rate of 5.0% was reported.

The total number of people unemployed shrank to 8.0 million in August. The unemployment rate for whites fell to 4.4%, while the rates for adult men (4.7%), adult women (4.7%), teenagers (16.9%), blacks (9.5%), Asians (3.5%) and Hispanics (6.6%) were almost unchanged. The number of people unemployed for less than 5 weeks dropped by 393 000 to 2.1 million in August, while the number of long-term unemployed (those looking for employment for 27 weeks or more) remained at 2.2 million and comprised 27.7% of the unemployed, according to the BLS.

In case the unemployment rate met expectations or even decreased further, this would have a bullish effect on the greenback, because of the positive implications for consumer spending. The Bureau of Labor Statistics will release the official employment data at 12:30 GMT.

Bond Yield Spread

The yield on Canadian 2-year government bonds went as high as 0.546% on October 1st, or the highest level since September 25th (0.561%), after which it slid to 0.527% at the close to add 0.009 percentage point compared to September 30th, while marking a third consecutive trading day of gains.

The yield on US 2-year government bonds climbed as high as 0.657% on October 1st, after which it closed at the exact same level to add 2.8 basis points (0.028 percentage point) compared to September 30th. It has been the first gain in the past four trading days.

The spread between 2-year US and 2-year Canadian bond yields, which reflects the flow of funds in a short term, expanded to 0.130% on October 1st from 0.111% on September 30th. The October 1st yield difference has been the largest one since September 29th, when the spread was 0.145%.

Meanwhile, the yield on Canadian 10-year government bonds soared as high as 1.466% on October 1st, after which it closed at 1.427% to lose 0.004 percentage point compared to September 30th, while marking a fourth consecutive trading day of decline.

The yield on US 10-year government bonds climbed as high as 2.072% on October 1st, after which it slipped to 2.047% at the close to add 1.2 basis points (0.012 percentage point) compared to September 30th. It has been the first gain in the past four trading days.

The spread between 10-year US and 10-year Canadian bond yields widened to 0.620% on October 1st from 0.604% on September 30th. The October 1st yield difference has been the largest one since September 29th, when the spread was 0.626%.

Daily and Weekly Pivot Levels

By employing the Camarilla calculation method, the daily pivot levels for USD/CAD are presented as follows:

R1 – 1.3279
R2 – 1.3290
R3 (range resistance) – 1.3301
R4 (range breakout) – 1.3333

S1 – 1.3257
S2 – 1.3246
S3 (range support) – 1.3235
S4 (range breakout) – 1.3203

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