Forex Market: USD/CAD daily trading outlook

Yesterday’s trade saw USD/CAD within the range of 1.3493-1.3621. The pair closed at 1.3580, soaring 0.63% on a daily basis, while marking its fourth consecutive trading day of gains. The daily high has been the highest level since June 23rd 2004, when a high of 1.3634 was registered.

At 10:08 GMT today USD/CAD was down 0.01% for the day to trade at 1.3585. The pair touched a daily low at 1.3557 at 7:10 GMT, making an exact test of the daily R2 level. Immediate support may be received at the hourly 21-period EMA, then at the 11.40% Fibonacci level (1.3530), which reflects the ascent from October 15th low to December 8th high, and finally at the psychological 1.3500 level. Immediate resistance may be encountered at 1.3600 and then at December 8th high (1.3621).

No relevant macroeconomic reports and other events, which may influence USD/CAD trading, are scheduled for release today.

Bond Yield Spread

The yield on Canada’s 2-year government bonds went as high as 0.652% on December 8th, after which it closed at 0.566% to lose 3.5 basis points (0.035 percentage point) compared to December 7th. It has been the seventh drop in the past twelve trading days and also a third consecutive one.

The yield on US 2-year government bonds climbed as high as 0.947% on December 8th, after which it closed at 0.935% to remain unchanged compared to December 7th.

The spread between 2-year US and 2-year Canadian bond yields, which reflects the flow of funds in a short term, widened to 0.369% on December 8th from 0.334% on December 7th. The December 8th yield spread has been the largest one in more than seven months.

Meanwhile, the yield on Canada’s 10-year government bonds soared as high as 1.536% on December 8th, after which it slid to 1.505% at the close to lose 1.5 basis points (0.015 percentage point) compared to December 7th. It has been the eighth drop in the past twelve trading days and also a third consecutive one.

The yield on US 10-year government bonds climbed as high as 2.245% on December 8th, after which it slipped to 2.227% at the close to lose 0.009 percentage point compared to December 7th. It has been the 12th drop in the past seventeen trading days and also a third consecutive one.

The spread between 10-year US and 10-year Canadian bond yields widened to 0.722% on December 8th from 0.716% on December 7th. The December 8th yield difference has been the largest one since September 10th, when the spread was 0.732%.

Daily and Weekly Pivot Levels

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

R1 – 1.3592
R2 – 1.3603
R3 (range resistance) – 1.3615
R4 (range breakout) – 1.3650

S1 – 1.3568
S2 – 1.3557
S3 (range support) – 1.3545
S4 (range breakout) – 1.3510

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

Central Pivot Point – 1.3356
R1 – 1.3423
R2 – 1.3484
R3 – 1.3551

S1 – 1.3295
S2 – 1.3228
S3 – 1.3167