Forex Market: USD/CAD daily trading outlook

Friday’s trade (in GMT terms) saw USD/CAD within the range of 1.3056-1.3185. The pair closed at 1.3126, edging up 0.29% compared to Thursdays close. It has been the 163rd gain in the past 300 trading days and also a fourth consecutive one. The daily high has been the highest level since May 24th, when a high of 1.3191 was registered. In weekly terms, USD/CAD added 1.19% to its value during the preceding week. It has been the 10th gain in the past 29 weeks and also the steepest one since the week ended on May 22nd, when the cross appreciated 1.33%. The major pair has extended its advance to 1.86% so far during the current month, following a 1.29% slump in June.

At 8:19 GMT today USD/CAD was edging up 0.19% on the day to trade at 1.3153. The pair touched a daily high at 1.3171 during early European trade, overshooting the range resistance level (R3), and a daily low at 1.3124 during the early phase of the Asian trading session.

Meanwhile, crude oil futures marked their 84th drop out of the past 155 trading days on July 22nd. Oil for September delivery went down as low as $43.74 per barrel and closed at $44.19, losing 1.25% compared to Thursday’s close. As of 8:26 GMT today the commodity was edging down 0.41% to trade at $44.01, after going down as low as $43.98 per barrel earlier.

No relevant macroeconomic reports and other events, which may influence USD/CAD trading, are scheduled on Monday (July 25th).

Correlation with other Majors

Taking into account the business week ended on July 22nd and the daily closing levels of the major currency pairs, we come to the following conclusions in regard to the strength of relationship:

USD/CAD to USD/CHF (0.8929, or very strong)
USD/CAD to USD/JPY (-0.0676, or very weak)
USD/CAD to GBP/USD (-0.4717, or moderate)
USD/CAD to AUD/USD (-0.9099, or very strong)
USD/CAD to EUR/USD (-0.9193, or very strong)
USD/CAD to NZD/USD (-0.9702, or very strong)

1. During the examined period USD/CAD moved almost equally in one and the same direction with USD/CHF.

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

3. USD/CAD moved almost independently compared to USD/JPY during the period in question.

Bond Yield Spread

The yield on Canada’s 2-year government bonds went as high as 0.607% on July 22nd, after which it closed at 0.562% to lose 0.005 percentage point compared to July 21st.

Meanwhile, the yield on US 2-year government bonds climbed as high as 0.719% on July 22nd, after which it fell to 0.707% at the close to add 2.5 basis points (0.025 percentage point) compared to July 21st.

The spread between 2-year US and 2-year Canadian bond yields, which reflects the flow of funds in a short term, widened to 0.145% on July 22nd from 0.115% on July 21st. The July 22nd yield spread has been the highest one since July 13th, when the difference was 0.170%.

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 – 1.3138
R2 – 1.3150
R3 (Range Resistance – Sell) – 1.3161
R4 (Long Breakout) – 1.3197
R5 (Breakout Target 1) – 1.3238
R6 (Breakout Target 2) – 1.3256

S1 – 1.3114
S2 – 1.3102
S3 (Range Support – Buy) – 1.3091
S4 (Short Breakout) – 1.3055
S5 (Breakout Target 1) – 1.3014
S6 (Breakout Target 2) – 1.2996

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

Central Pivot Point – 1.3078
R1 – 1.3234
R2 – 1.3341
R3 – 1.3497
R4 – 1.3652

S1 – 1.2971
S2 – 1.2815
S3 – 1.2708
S4 – 1.2600

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