Yesterday’s trade (in GMT terms) saw USD/CAD within the range of 1.2938-1.3083. The pair closed at 1.2976, shedding 0.51% compared to Tuesdays close. It has been the 135th drop in the past 293 trading days and also a second consecutive one. The major pair has pared its advance to 0.07% so far during the current month, following a 1.29% slump in June.
At 7:47 GMT today USD/CAD was edging down 0.35% on the day to trade at 1.2931. The pair touched a daily high at 1.2976 during early Asian trade, undershooting the daily R1 level, and a daily low at 1.2906 during the late phase of the Asian trading session.
Meanwhile, crude oil futures marked their 80th drop out of the past 148 trading days on July 13th. Oil for August delivery went down as low as $44.58 per barrel and closed at $44.75, plunging 4.38% compared to Tuesday’s close. As of 7:58 GMT today the commodity was gaining 0.94% to trade at $45.17, after going up as high as $45.52 per barrel earlier.
On Thursday USD/CAD trading may be influenced by the following macroeconomic reports and other events as listed below.
Fundamentals
United States
Initial, Continuing Jobless Claims
The number of people in the United States, who filed for unemployment assistance for the first time during the business week ended on July 8th, probably rose to 265 000, according to market consensus, from 254 000 in the preceding week. The latter has been the lowest number of claims since the business week ended on April 15th, when a revised up 248 000 claims were reported.
The 4-week moving average, an indicator lacking seasonal effects, was 264 750, marking a drop by 2 500 compared to the preceding weeks revised up average.
The business week, which ended on July 1st, has been the 70th consecutive week, when jobless claims stood below the 300 000 threshold, which suggested a healthy labor market. It has been the longest streak in 43 years.
Initial jobless claims number is a short-term indicator, reflecting lay-offs in the country. In case the number of claims met expectations or increased further, this would have a moderate bearish effect on the US dollar.
The number of continuing jobless claims probably rose to the seasonally adjusted 2 128 000 during the business week ended on July 1st, according to the median forecast by experts, from 2 124 000 in the preceding week. The latter represented a drop by 44 000 compared to the revised up number of claims reported in the week ended on June 17th. This indicator reflects the actual number of people unemployed and currently receiving unemployment benefits, who filed for unemployment assistance at least two weeks ago.
The US Department of Labor is to release the weekly report at 12:30 GMT.
Producer Prices
Annual producer prices in the United States probably fell for a second consecutive month in June, edging down 0.1%, according to the median estimate by experts. In May prices dipped at an annual rate of 0.1%. The Producer Price Index reflects the change in prices of over 8 000 products, sold by manufacturers during the respective period. The PPI differs from the Consumer Price Index (CPI), which measures the change in prices from consumer’s perspective, due to subsidies, taxes and distribution costs of different types of manufacturers in the country. In case producers are forced to pay more for goods and services, they are more likely to pass these higher costs to the end consumer. Therefore, the PPI is considered as a leading indicator of consumer inflation. In case annual producer prices fell at a faster rate than anticipated, this would have a limited-to-moderate bearish effect on the US dollar.
The nation’s annualized core producer price inflation, which excludes prices of volatile categories such as food and energy, probably decelerated to 1.0% in June from 1.2% in May. The latter has been the fastest annual increase in the core PPI since February, when the index gained 1.2%. The Bureau of Labor Statistics is expected to report on the official PPI performance at 12:30 GMT.
Fed Speakers
Markets will be paying attention to the statements by several FOMC members. At 15:15 GMT the Fed President for Atlanta, Dennis Lockhart, is expected to speak, followed by the Fed President for Kansas City, Esther George, at 17:15 GMT. Any remarks regarding the US economic outlook or the Banks monetary policy stance would certainly boost USD volatility.
Canada
New Housing Price Index
Selling prices of new homes in Canada probably rose for a 14th straight month in May, up 0.2% from a month ago, according to market expectations. In April compared to March prices went up by another 0.3%. Home values climbed at a rate of 2.1% in April compared to the same month a year ago, following a 2.0% surge during the prior period. The combined region of Toronto and Oshawa was the main contributor to the overall increase, with home values there rising at a monthly rate of 0.7% in April. Additionally, prices went up in Kitchener–Cambridge–Waterloo (+0.8%, marking the highest level since June 2012), Victoria (+0.8%, or the highest level since May 2007), St. Catharines–Niagara (+0.7%) and Vancouver (+0.2%).
The New Housing Price Index is a key indicator, reflecting the health of the Canadian housing market. Given the current state of the economy, in case prices surged more than anticipated, this would be an indication of a stronger consumer confidence and would, therefore, have a limited bullish effect on the loonie. Statistics Canada will release the official report at 12:30 GMT.
Bond Yield Spread
The yield on Canada’s 2-year government bonds went as high as 0.505% on July 13th, after which it closed at 0.495% to lose 1 basis point (0.01 percentage point) compared to July 12th.
Meanwhile, the yield on US 2-year government bonds climbed as high as 0.693% on July 13th, after which it fell to 0.665% at the close to lose 2.4 basis points (0.024 percentage point) compared to July 12th.
The spread between 2-year US and 2-year Canadian bond yields, which reflects the flow of funds in a short term, narrowed to 0.170% on July 13th from 0.184% on July 12th. The July 13th yield spread has been the lowest one since July 8th, when the difference was 0.147%.
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 – 1.2989
R2 – 1.3003
R3 (Range Resistance – Sell) – 1.3016
R4 (Long Breakout) – 1.3056
R5 (Breakout Target 1) – 1.3102
R6 (Breakout Target 2) – 1.3121
S1 – 1.2963
S2 – 1.2949
S3 (Range Support – Buy) – 1.2936
S4 (Short Breakout) – 1.2896
S5 (Breakout Target 1) – 1.2850
S6 (Breakout Target 2) – 1.2831
By using the traditional method of calculation, the weekly levels of importance for USD/CAD are presented as follows:
Central Pivot Point – 1.2987
R1 – 1.3147
R2 – 1.3250
R3 – 1.3410
R4 – 1.3570
S1 – 1.2884
S2 – 1.2724
S3 – 1.2621
S4 – 1.2518
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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