Yesterday’s trade saw USD/CAD within the range of 1.3297-1.3344. The pair closed at 1.3318, down 0.10% on a daily basis. It has been the first loss in the past four trading days.
At 9:43 GMT today USD/CAD was losing 0.12% for the day to trade at 1.3304. The pair touched a daily low at 1.3298 at 9:22 GMT. It was a higher-low test of the low from Tuesday and an undershooting of the lower range breakout level (S4). Support may be provided at November 16th low of 1.3288, while resistance may be encountered at the upper Bollinger band (on the 1-day time frame) in the area around November 16th high of 1.3373.
On Wednesday USD/CAD trading may be influenced by the macroeconomic reports listed below.
Fundamentals
United States
Housing starts, Building permits
The number of housing starts in the United States probably dropped to 1.160 million units in October, according to market expectations, from the seasonally adjusted annual rate of 1.206 million during the prior month. Septembers increase in housing starts was supported by both single-family houses (up 0.3% to reach 740 000) and buildings with five units or more (a 17% surge to 454 000). Housing starts in the West marked the most considerable increase in September (+25.4%), followed by starts in the Northeast (+23.4%) and starts in the South (+0.6%). At the same time, housing starts in the Midwest dropped for the second consecutive month in September, down 12.2%.
Housing starts represent a gauge to measure residential units, on which construction has already begun every month. A start in construction is defined as the foundation laying of a building and it encompasses residential housing primarily.
The number of building permits in the country probably increased to 1.150 million in October from a revised up annual level of 1.105 million in September (1.103 million previously). The latter has been the lowest number of permits since March 2015, when a level of 1.039 million was reported. Single-family authorizations fell at a monthly rate of 0.3% to 697 000 units in September, while permits of units in buildings with five units or more were reported to have dropped 14.6% to 369 000.
Building permits are permits, issued in order to allow excavation. An increase in the number of building permits and housing starts usually occurs a few months after mortgage rates in the country have been reduced. Authorizations are not required in all regions of the United States. Building permits, as an indicator, provide clues in regard to demand in the US housing market. In case a higher-than-anticipated figure is reported, this would support demand for the US dollar. The official report is due out at 13:30 GMT.
FOMC Minutes
At 18:00 GMT the Federal Open Market Committee (FOMC) will release the minutes from its meeting on policy held on October 27th-28th. The minutes offer detailed insights on FOMC’s monetary policy stance. This release is closely examined by analysts and market participants, as it may offer clues over interest rate decisions in the future. High volatility of currency pairs containing the US dollar is usually present after the publication.
During her testimony in front of the House Financial Services Committee in Washington, Federal Reserve Chair Janet Yellen reiterated that US economic development was on track and an adjustment of the banks policy stance in December was appropriate, in case incoming macroeconomic data favored it. Yellen stressed that domestic spending has marked a solid increase, while downside risks to the economy, posed by global macroeconomic and financial developments, decreased.
Bond Yield Spread
The yield on Canada’s 2-year government bonds went as high as 0.635% on November 17th, or the highest level since November 13th (0.657%), after which it closed at 0.622% to add 0.008 percentage point compared to November 16th. It has been the second consecutive trading day of increase.
The yield on US 2-year government bonds climbed as high as 0.888% on November 17th, or the highest level since November 10th (0.891%), after which it closed at 0.863% to add 0.008 percentage point compared to November 16th. It has been the second consecutive trading day of gains.
The spread between 2-year US and 2-year Canadian bond yields, which reflects the flow of funds in a short term, remained steady at 0.241% on November 17th. It has been the highest yield spread since September 16th, when the difference was 0.280%.
Meanwhile, the yield on Canada’s 10-year government bonds soared as high as 1.693% on November 17th, or the highest level since November 13th (1.706%), after which it slid to 1.658% at the close to add 0.009 percentage point compared to November 16th. It has been the first gain in the past six trading days.
The yield on US 10-year government bonds climbed as high as 2.313% on November 17th, or the highest level since November 13th (2.320%), after which it slipped to 2.275% at the close to remain unchanged compared to November 16th.
The spread between 10-year US and 10-year Canadian bond yields narrowed to 0.617% on November 17th from 0.626% on November 16th. The November 17th yield difference has been the lowest one since November 12th, when the spread was 0.617%.
Daily and Weekly Pivot Levels
By employing the Camarilla calculation method, the daily pivot levels for USD/CAD are presented as follows:
R1 – 1.3322
R2 – 1.3328
R3 (range resistance) – 1.3332
R4 (range breakout) – 1.3344
S1 – 1.3314
S2 – 1.3308
S3 (range support) – 1.3305
S4 (range breakout) – 1.3292
By using the traditional method of calculation, the weekly pivot levels for USD/CAD are presented as follows:
Central Pivot Point – 1.3298
R1 – 1.3376
R2 – 1.3428
R3 – 1.3506
S1 – 1.3246
S2 – 1.3168
S3 – 1.3116
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