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Friday’s trade saw USD/CAD within the range of 1.3705-1.3920. The pair closed at 1.3915, surging 1.18% on a daily basis. It has been the 14th gain in the past 24 trading days and also the sharpest one since January 25th, when the pair added 1.23%. In weekly terms, USD/CAD lost 0.42% last week, marking its third consecutive drop. The pair has slipped 0.60% so far during the current month, following three successive months of gains.

At 9:47 GMT today USD/CAD was losing 0.23% for the day to trade at 1.3884. The pair touched a daily low at 1.3841 at 8:30 GMT and a daily high at 1.3905 during the early phase of the Asian trading session.

Canada’s dollar has paired recent gains, as crude oil continued its decline. Friday marked the 19th drop in oil prices out of the past 36 trading days. Oil futures for March delivery went down as low as $30.63 per barrel on February 5th and closed at a level of $30.89. As of 9:57 GMT today the commodity was losing 1.38% on a daily basis to trade at $30.40 per barrel, after going down as low as $30.38 earlier. Oil has increased its slump to 9.65% so far during the current month.

On Monday USD/CAD trading may be influenced by the following macroeconomic reports as listed below.

Fundamentals

Canada

Housing Starts, Building Permits

At 13:15 GMT the Canadian Mortgage and Housing Corporation is to report on the number of housing starts in the country in January. The number of housing starts fell to the seasonally adjusted annual level of 172 965 in December from a revised up level of 212 028 in November. Decembers figure has been the lowest since February 2015, when 151 200 starts were reported. The multi-unit segment registered a 27% slump to 101 264 units in December, while the single-detached segment remained unchanged at 57 743 units.

Housing starts are considered as a key indicator, reflecting the strength of the nation’s housing sector. In case the number of housing starts increased in January from a month ago, this would have a moderate bullish effect on the loonie.

At 13:30 GMT Statistics Canada will report on the overall value of building permits in the country, issued by municipalities in December. The total value of building permits in Canada decreased 19.6% to reach CAD 6.2 billion in November compared to a month ago. It has been the lowest value of permits since February 2015. The value of residential permits issued went down 17.8%, while that of non-residential permits dropped 22.7% in November. In October the value of permits, issued by the government, went up 9.1%.

Building permits, as an indicator, provide information regarding demand in Canada’s housing sector. In case the total value of permits rose in December from a month earlier, this would have a limited bullish effect on the Canadian dollar, and vice versa.

Correlation with other Majors

Taking into account the week ended on February 5th and the daily closing levels of the currency pairs involved, we come to the following conclusions in regard to the strength of relationship:

USD/CAD to USD/JPY (0.6884, or strong)
USD/CAD to USD/CHF (0.6559, or strong)
USD/CAD to EUR/USD (-0.7786, or strong)
USD/CAD to AUD/USD (-0.9417, or very strong)
USD/CAD to NZD/USD (-0.9527, or very strong)
USD/CAD to GBP/USD (-0.9631, or very strong)

1. During the examined period USD/CAD moved strongly in one and the same direction with USD/CHF and USD/JPY, while moving strongly in the opposite direction compared to EUR/USD.

2. USD/CAD moved almost equally in the opposite direction compared to AUD/USD, NZD/USD and GBP/USD during the past week. This relationship has been the most pronounced between USD/CAD and GBP/USD.

Daily and Weekly Pivot Levels

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

R1 – 1.3935
R2 – 1.3954
R3 (range resistance) – 1.3974
R4 (range breakout) – 1.4033

S1 – 1.3895
S2 – 1.3876
S3 (range support) – 1.3856
S4 (range breakout) – 1.3797

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

Central Pivot Point – 1.3884
R1 – 1.4134
R2 – 1.4352
R3 – 1.4602

S1 – 1.3666
S2 – 1.3416
S3 – 1.3198

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