Forex Market: USD/CAD daily trading forecast

Yesterday’s trade saw USD/CAD within the range of 1.3061-1.3118. The pair closed at 1.3095, rising 0.15% on a daily basis. It has been the first gain in the past four trading days. The daily low was a higher-low test of October 30th low, which, on the other hand, has been the lowest level since October 23rd, when a low of 1.3037 was reached.

At 8:13 GMT today USD/CAD was losing 0.05% for the day to trade at 1.3089. The pair touched a daily low at 1.3080 at 4:45 GMT, testing the range support level (S3), while trading below the weekly central pivot level for a second straight trading day.

On Tuesday USD/CAD trading may be influenced by the macroeconomic reports listed below.

Fundamentals

United States

Factory Orders

Factory orders in the United States probably shrank for a second straight month in September, falling 0.9% on a monthly basis, according to market expectations. In August orders dropped 1.7%, or at the steepest monthly pace since December 2014, when the indicator posted a 3.5% slump. Excluding the sector of transportation, factory orders fell 0.8% in August compared to July, marking a second straight month of decline. This indicator presents the total value of new purchase orders, placed at manufacturers for durable and non-durable goods, and can provide insight into inflation and growth in the US sector of manufacturing. In case new orders decreased at a faster-than-anticipated rate in September, this would have a moderate bearish effect on the US dollar, as it implies future growth obstacles. The US Census Bureau will release the official data at 15:00 GMT.

Bond Yield Spread

The yield on Canada’s 2-year government bonds went as high as 0.604% on November 2nd, or the highest level since June 29th (0.635%), after which it closed at 0.581% to add 0.005 percentage point compared to October 30th, while marking the fourth consecutive trading day of increase.

The yield on US 2-year government bonds climbed as high as 0.757% on November 2nd, or the highest level since September 17th (0.815%), after which it closed at 0.753% to add 2.5 basis points (0.025 percentage point) compared to October 30th.

The spread between 2-year US and 2-year Canadian bond yields, which reflects the flow of funds in a short term, expanded to 0.172% on November 2nd from 0.152% on October 30th. The November 2nd yield spread has been the largest one since September 24th, when the difference was 0.178%.

Meanwhile, the yield on Canada’s 10-year government bonds soared as high as 1.596% on November 2nd, or the highest level since September 17th (1.609%), after which it slid to 1.574% at the close to add 3.3 basis points (0.033 percentage point) compared to October 30th.

The yield on US 10-year government bonds climbed as high as 2.189% on November 2nd, or the highest level since September 25th (2.198%), after which it slipped to 2.167% at the close to add 2.1 basis points (0.021 percentage point) compared to October 30th.

The spread between 10-year US and 10-year Canadian bond yields narrowed to 0.593% on November 2nd from 0.605% on October 30th. The November 2nd yield difference has been the lowest one since October 23rd, when the spread was 0.581%.

Daily and Weekly Pivot Levels

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

R1 – 1.3100
R2 – 1.3105
R3 (range resistance) – 1.3112
R4 (range breakout) – 1.3126

S1 – 1.3090
S2 – 1.3085
S3 (range support) – 1.3079
S4 (range breakout) – 1.3064

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

Central Pivot Point – 1.3137
R1 – 1.3222
R2 – 1.3366
R3 – 1.3451

S1 – 1.2993
S2 – 1.2908
S3 – 1.2764