Forex Market: EUR/CAD daily trading forecast

Yesterday’s trade saw EUR/CAD within the range of 1.4381-1.4507. The pair closed at 1.4458, up 0.36% on a daily basis, following a 1.71% slump on Wednesday. The latter has been the steepest daily rate of decline since October 22nd, when the pair plummeted 2.42%.

At 10:44 GMT today EUR/CAD was gaining 0.06% for the day to trade at 1.4468. The pair touched a daily high at 1.4482 at 8:55 GMT, testing the daily R2 level.

On Friday EUR/CAD trading may be influenced by the macroeconomic reports listed below.

Fundamentals

Canada

Gross Domestic Product

Canadian Gross Domestic Product (GDP) probably expanded for a third consecutive month in August, up at a monthly rate of 0.1%, according to the median forecast by experts. In July the nation’s GDP grew 0.3%, driven by growth in sectors such as mining, quarrying and oil and gas extraction (+2.9%), manufacturing (+0.6%) and finance and insurance (+0.8%), according to the report by Statistics Canada.

In case a slower-than-projected monthly rate of growth is reported, this would have a moderate-to-strong bearish effect on the loonie. The official GDP performance is to be announced at 12:30 GMT.

Bond Yield Spread

The yield on Canada’s 2-year government bonds went as high as 0.575% on October 29th, or the highest level since June 30th (0.584%), after which it closed at the exact same level to add 3.1 basis points (0.031 percentage point) compared to October 28th, while marking the second consecutive trading day of increase.

The yield on German 2-year government bonds went as high as -0.312% on October 29th, or the highest level since October 23rd (-0.301%), after which it slid to -0.319% at the close to add 2.6 basis points (0.026 percentage point) in comparison with October 28th. It has been the first increase in the past four trading days.

The spread between 2-year Canadian and 2-year German bond yields, which reflects the flow of funds in a short term, widened to 0.894% on October 29th from 0.889% on October 28th. The October 29th yield spread has been the largest one in more than four months.

Meanwhile, the yield on Canada’s 10-year government bonds soared as high as 1.557% on October 29th, or the highest level since September 17th (1.609%), after which it slid to 1.549% at the close to add 6.7 basis points (0.067 percentage point) compared to October 28th, while marking the second straight trading day of gains.

The yield on German 10-year government bonds soared as high as 0.544% on October 29th, or the highest level since October 22nd (0.585%), after which it slid to 0.533% at the close to add 8.8 basis points (0.088 percentage point) compared to October 28th. It has been the first gain in the past four trading days.

The spread between 10-year Canadian and 10-year German bond yields narrowed to 1.016% on October 29th from 1.037% on October 28th. The October 29th yield difference has been the lowest one since October 27th, when the spread was 0.975%.

Daily and Weekly Pivot Levels

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

R1 – 1.4470
R2 – 1.4481
R3 (range resistance) – 1.4493
R4 (range breakout) – 1.4527

S1 – 1.4446
S2 – 1.4435
S3 (range support) – 1.4423
S4 (range breakout) – 1.4389

By using the traditional method of calculation again, the weekly pivot levels for EUR/CAD are presented as follows:

Central Pivot Point – 1.4619
R1 – 1.4799
R2 – 1.5093
R3 – 1.5273

S1 – 1.4325
S2 – 1.4145
S3 – 1.3851