Forex Market: USD/CAD daily trading outlook

Yesterday’s trade saw USD/CAD within the range of 1.3276-1.3340. The pair closed at 1.3298, slipping a meager 0.04% on a daily basis, while extending the loss from Tuesday. The daily low has been a lower-low test of the low from November 24th and also the lowest level since November 20th, when a low of 1.3266 was reached.

At 9:51 GMT today USD/CAD was gaining 0.19% for the day to trade at 1.3314. The pair touched a daily high at 1.3324 at 7:55 GMT, overshooting the range resistance level (R3).

The 15-minute time frame shows that the pair may attempt to test the daily high at 1.3324, in case price action remains contained above the middle Bollinger line. In addition, the 14-period RSI stands above its 50.00 level and is still at a comfortable distance from the overbought area, while the distance between the +DI (green) and the -DI (red) lines of the ADX is set to expand. The MACD is set to enter positive territory, also adding to the case of a possible up move. In case a test and a break above todays high is observed, the pair may advance further to test the high from Wednesday (1.3340). On the other hand, short-term support may be received within the area 1.3265-1.3285.

No relevant macroeconomic reports or other events, which may influence USD/CAD trading, are scheduled on Thursday.

Bond Yield Spread

The yield on Canada’s 2-year government bonds went as high as 0.634% on November 25th, or the highest level since November 23rd (0.641%), after which it closed at 0.629% to add 0.009 percentage point compared to November 24th. It has been the fifth gain in the past thirteen trading days.

The yield on US 2-year government bonds climbed as high as 0.946% on November 25th, after which it closed at 0.934% to add 0.004 percentage point compared to November 24th. It has been the eighth consecutive trading day of increase.

The spread between 2-year US and 2-year Canadian bond yields, which reflects the flow of funds in a short term, narrowed to 0.305% on November 25th from 0.310% on November 24th. The November 25th yield spread has been the lowest one since November 23rd, when the difference was 0.304%.

Meanwhile, the yield on Canada’s 10-year government bonds soared as high as 1.616% on November 25th, after which it slid to 1.590% at the close to lose 2.6 basis points (0.026 percentage point) compared to November 24th. It has been the ninth drop in the past thirteen trading days.

The yield on US 10-year government bonds climbed as high as 2.248% on November 25th, after which it slipped to 2.234% at the close to lose 0.005 percentage point compared to November 24th. It has been the third consecutive trading day of increase.

The spread between 10-year US and 10-year Canadian bond yields widened to 0.644% on November 25th from 0.623% on November 24th. The November 25th yield difference has been the largest one since September 28th, when the spread was 0.653%.

Daily and Weekly Pivot Levels

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

R1 – 1.3304
R2 – 1.3310
R3 (range resistance) – 1.3317
R4 (range breakout) – 1.3333

S1 – 1.3292
S2 – 1.3285
S3 (range support) – 1.3279
S4 (range breakout) – 1.3262

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

Central Pivot Point – 1.3319
R1 – 1.3396
R2 – 1.3449
R3 – 1.3526

S1 – 1.3266
S2 – 1.3189
S3 – 1.3136