Yesterday’s trade saw USD/CAD within the range of 1.2878-1.3020. The pair closed at 1.3002, edging up 0.32% compared to Wednesdays close. It has been the 156th gain in the past 289 trading days. The major pair has increased its advance to 0.67% so far during the current month, following a 1.29% slump in June.
At 7:53 GMT today USD/CAD was inching up 0.05% on the day to trade at 1.3009. The pair touched a daily high at 1.3021 during early European trade, overshooting the daily R1 level, and a daily low at 1.2990 during the early phase of the Asian trading session.
Meanwhile, crude oil futures marked their 78th drop out of the past 144 trading days on July 7th. Oil for August delivery went down as low as $44.87 per barrel, or its lowest level since May 11th, and closed at $45.38, plummeting 4.32% compared to Wednesday’s close. As of 8:01 GMT today the commodity was up 0.33% to trade at $45.53, after going up as high as $45.76 per barrel earlier.
On Friday USD/CAD trading may be influenced by the following macroeconomic reports as listed below.
Fundamentals
United States
Non-farm Payrolls, Unemployment Rate, Average Hourly Earnings
Employers in all sectors of economy in the United States, excluding the farming industry, probably added 175 000 new jobs in June, according to the median forecast by experts, after a job gain of 38 000 in May. The latter has been the slowest growth rate since May 2011, when a revised down figure of 25 000 was reported.
Employment in health care rose by 46 000 in May and by 10 000 in professional and business services. On the other hand, employment continued to decrease in the US mining sector (-10 000), fell by 18 000 in manufacturing and by 34 000 in information services. Employment in other key industries such as construction, wholesale trade, retail trade, transportation and warehousing, financial activities, leisure and hospitality, government remained little changed in May.
Total non-farm payrolls account for 80% of the workers, who produce the entire Gross Domestic Product of the United States. In case of a lower-than-expected gain in jobs in June, demand for the US dollar would be strongly pressured.
Average Hourly Earnings probably increased 0.2% in June compared to the prior month, according to market expectations, following another 0.2% gain to USD 25.59 in May. If expectations were met, June would be the fourth consecutive month of earnings increase.
Meanwhile, the rate of unemployment in the country probably increased to 4.8% in June, according to market expectations, from 4.7% in May. The latter has been the lowest rate of unemployment since November 2007.
The total number of people unemployed dropped by 484 000 at 7.4 million in May. Among major groups, the unemployment rate for adult men (4.3%), adult women (4.2%), Whites (4.1%), and Hispanics (5.6%) fell during the month. On the other hand, the rates for teenagers (16.0%), Blacks (8.2%) and Asians (4.1%) remained little changed.
The number of long-term unemployed (those looking for employment for 27 weeks or more) dropped by 178 000 to 1.9 million during May and comprised 25.1% of the unemployed, according to the BLS. At the same time, the number of persons in part-time employment for economic reasons (involuntary part-time workers) went up by 468 000 to 6.4 million in May.
In case the unemployment rate met expectations or even rose further, this would have a strong bearish effect on the US Dollar, because of the negative implications for consumer spending. The Bureau of Labor Statistics will release the official employment report at 12:30 GMT.
Canada
Employment Change, Unemployment Rate
The number of the employed people in Canada probably increased by 5 000 in June, according to market expectations, following a surge by 13 800 in May.
The number of part-time employed persons dropped by 47 000 in May from a month ago, while the number of persons in full-time employment went up by 61 000. During the month employment was higher for both men and women aged 55+, while it decreased for persons aged between 15 and 24. Employment for other demographic groups remained almost unchanged.
Meanwhile, the rate of unemployment in the country probably rose to 7.0% in June, according to the median forecast by analysts, after unexpectedly falling to 6.9% in the preceding month. The latter has been the lowest rate of unemployment since July 2015 (6.8%).
A higher-than-expected rate of increase in employment and a stable or even lower unemployment rate would have a strong bullish effect on the local currency, due to positive implications in regard to consumer spending. Statistics Canada is expected to release the official employment report at 12:30 GMT.
Bond Yield Spread
The yield on Canada’s 2-year government bonds went as high as 0.510% on July 7th, after which it closed at 0.466% to lose 1.9 basis points (0.019 percentage point) compared to July 6th.
Meanwhile, the yield on US 2-year government bonds climbed as high as 0.617% on July 7th, or the highest level since June 30th (0.649%), after which it fell to 0.597% at the close to add 1.6 basis points (0.016 percentage point) compared to July 6th.
The spread between 2-year US and 2-year Canadian bond yields, which reflects the flow of funds in a short term, widened to 0.131% on July 7th from 0.096% on July 6th. The July 7th yield spread has been the highest one since June 23rd, when the difference was 0.159%.
Daily, Weekly and Monthly Pivot Levels
By employing the Camarilla calculation method, the daily levels of importance for USD/CAD are presented as follows:
R1 – 1.3015
R2 – 1.3028
R3 (Range Resistance – Sell) – 1.3041
R4 (Long Breakout) – 1.3080
R5 (Breakout Target 1) – 1.3126
R6 (Breakout Target 2) – 1.3145
S1 – 1.2989
S2 – 1.2976
S3 (Range Support – Buy) – 1.2963
S4 (Short Breakout) – 1.2924
S5 (Breakout Target 1) – 1.2878
S6 (Breakout Target 2) – 1.2859
By using the traditional method of calculation, the weekly levels of importance for USD/CAD are presented as follows:
Central Pivot Point – 1.2966
R1 – 1.3072
R2 – 1.3228
R3 – 1.3334
R4 – 1.3441
S1 – 1.2810
S2 – 1.2704
S3 – 1.2548
S4 – 1.2393
In monthly terms, for USD/CAD we have the following pivots:
Central Pivot Point – 1.2907
R1 – 1.3163
R2 – 1.3401
R3 – 1.3657
R4 – 1.3913
S1 – 1.2669
S2 – 1.2413
S3 – 1.2175
S4 – 1.1937
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