Yesterday’s trade (in GMT terms) saw USD/CAD within the range of 1.3027-1.3129. The pair closed at 1.3124, rising 0.74% compared to Fridays close. It has been the 166th gain in the past 306 trading days and also the steepest one since July 5th, when the pair appreciated 1.04%. The cross has added 0.74% to its value so far during the current month, following a 0.80% advance in July.
At 7:44 GMT today USD/CAD was edging down 0.11% on the day to trade at 1.3110. The pair touched a daily high at 1.3143 during early Asian trade, making an exact test of the daily R2 level, and a daily low at 1.3101 during the early phase of the European trading session.
Meanwhile, crude oil futures marked their 89th drop out of the past 161 trading days on August 1st. Oil for September delivery went down as low as $39.82 per barrel, or a level unseen since April 19th, and closed at $40.06, losing 3.70% compared to Friday’s close. As of 7:53 GMT today the commodity was shedding 0.45% to trade at $39.88, after going down as low as $39.86 per barrel earlier. Crude oil prices and CAD valuation tend to be strongly positively correlated.
On Tuesday USD/CAD trading may be influenced by the following macroeconomic reports and other events as listed below.
Fundamentals
United States
Feds Kaplan speech
At 10:15 GMT the Federal Reserve President for Dallas and also a FOMC member, Robert Kaplan, is expected to take a statement. Any remarks made in regard to inflation, growth, or monetary policy would certainly bolster USD volatility.
Personal Income, Personal Spending and PCE Inflation
Personal spending in the United States probably rose 0.3% in June, according to market expectations, while personal income was probably up for a 15th consecutive month in June, increasing at a monthly rate of 0.4%.
Consumer spending, which accounts for over two thirds of the nations GDP, rose 0.4% in May, following a revised up 1.1% gain in April. At the same time, personal income increased 0.2% in May, following a revised up 0.5% surge in the prior month. Disposable personal income rose 0.2%, or USD 33.9 billion, in May.
Wages and salaries were up USD 14.7 billion in May, following an increase by USD 40.4 billion in the preceding month, while supplements to wages and salaries rose USD 4.6 billion in May, after going up USD 6.0 billion in April. Private sector wages and salaries went up USD 11.8 billion in May, after a surge by USD 38.7 billion a month ago, while government wages and salaries rose USD 2.9 billion, after going up by USD 1.6 billion in April.
Higher-than-expected rates of increase imply good employment conditions and, therefore, are dollar positive. The Bureau of Economic Analysis is to publish the official figures at 12:30 GMT.
At the same time, the Core PCE Price Index, the preferred measure of inflation by the Federal Reserve, probably rose 1.6% year-on-year in June, according to expectations, or matching the rate of increase reported in the previous three months. On a monthly basis, the Core PCE Price Index probably increased for a sixth consecutive month in June, going up 0.1%, according to analyst projections.
Canada
RBC Manufacturing PMI
At 13:30 GMT Royal Bank of Canada (RBC) is to report on manufacturing activity in July. The corresponding Manufacturing Purchasing Managers Index stood in the zone of expansion for a fourth consecutive month in June, coming in at a reading of 51.8, down from 52.1 in May.
In June the gauges of output, new business and employment growth slowed down slightly, while that for stocks of finished goods fell at a record rate.
The PMI report is based on data collected from monthly replies to questionnaires sent to supply managers in over 400 industrial companies. The PMI is a compound index based on five individual indexes: new orders, production, employment, delivery time, stocks of purchases. Values of the index above the key level of 50.0 indicate overall increase in activity in the sector, while readings below 50.0 are indicative of contraction in activity. PMIs are earlier indicators of economic conditions published on a monthly basis and are available much before the publication of relevant data from government authorities. This way they provide an earlier insight about economic development trends.
In case the gauge continued to inhabit the area above 50.00 and outpaced Junes reading, this would have a moderate bullish effect on the Canadian dollar.
Bond Yield
The yield on US 2-year government bonds climbed as high as 0.695% on August 1st, after which it fell to 0.687% at the close to add 2.4 basis points (0.024 percentage point) compared to July 29th.
Canadas bond market remained closed on Monday (August 1st).
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 – 1.3133
R2 – 1.3143
R3 (Range Resistance – Sell) – 1.3152
R4 (Long Breakout) – 1.3180
R5 (Breakout Target 1) – 1.3213
R6 (Breakout Target 2) – 1.3227
S1 – 1.3115
S2 – 1.3105
S3 (Range Support – Buy) – 1.3096
S4 (Short Breakout) – 1.3068
S5 (Breakout Target 1) – 1.3035
S6 (Breakout Target 2) – 1.3021
By using the traditional method of calculation, the weekly levels of importance for USD/CAD are presented as follows:
Central Pivot Point – 1.3095
R1 – 1.3187
R2 – 1.3347
R3 – 1.3439
R4 – 1.3532
S1 – 1.2935
S2 – 1.2843
S3 – 1.2683
S4 – 1.2524
In monthly terms, for USD/CAD we have the following pivots:
Central Pivot Point – 1.3038
R1 – 1.3244
R2 – 1.3460
R3 – 1.3666
R4 – 1.3872
S1 – 1.2822
S2 – 1.2616
S3 – 1.2400
S4 – 1.2184
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