Yesterday’s trade (in GMT terms) saw USD/CAD within the range of 1.3063-1.3149. The pair closed at 1.3067, edging down 0.34% compared to Tuesdays close. It has been the 142nd drop in the past 308 trading days and also a second consecutive one. The daily high has been the highest level since July 29th, when a high of 1.3188 was registered. The cross has trimmed its advance to 0.30% so far during the current month, following a 0.80% rise in July.
At 7:28 GMT today USD/CAD was inching up 0.04% on the day to trade at 1.3072. The pair touched a daily high at 1.3091 during early European trade, making an exact test of the range resistance level (R3), and a daily low at 1.3038 during the early phase of the Asian trading session.
Meanwhile, crude oil futures marked their 73rd gain out of the past 163 trading days on August 3rd. Oil for September delivery went down as low as $39.19 per barrel, or a level unseen since April 18th, and closed at $40.83, surging 3.34% compared to Tuesday’s close. As of 7:41 GMT today the commodity was edging down 0.10% to trade at $40.79, after going down as low as $40.77 per barrel earlier. Crude oil prices and CAD valuation tend to be strongly positively correlated.
On Thursday 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.
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 29th, probably fell to 265 000, according to market consensus, from 266 000 in the preceding week. The latter has been the highest number of claims since the business week ended on July 1st, when a revised up 270 000 claims were reported.
The 4-week moving average, an indicator lacking seasonal effects, was 256 500, marking a drop by 1 000 compared to the preceding weeks revised up average.
The business week, which ended on July 22nd, has been the 73rd 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 decreased further, this would have a moderate bullish effect on the US dollar.
The number of continuing jobless claims probably fell to the seasonally adjusted 2 130 000 during the business week ended on July 22nd, according to the median forecast by experts, from 2 139 000 in the preceding week. The latter represented an increase by 7 000 compared to the revised up number of claims reported in the week ended on July 8th. 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.
Factory Orders
The total value of factory orders in the United States probably shrank 1.8% in June compared to May, according to the median estimate by experts, following an unrevised 1.0% drop in the preceding month. If market expectations were met, this would be the largest monthly contraction since December 2015, when the value of factory orders was reported to have shrunk 2.9%. In May, orders for non-defense capital goods excluding aircraft, a gauge of business confidence and spending plans, shrank at a monthly 0.4%, following a 0.7% decrease in April.
Excluding the sector of transportation, factory orders went up 0.1% in May from a month ago, while extending gains in March and April.
The general index reflects the total value of new purchase orders, placed at manufacturers for durable and non-durable goods, and can provide insight into inflation and growth in the US sector of manufacturing. In case the general index of new orders decreased at a faster-than-anticipated rate, this would trigger a moderate bearish impulse for the US dollar, as it implies future growth deceleration. The US Census Bureau will release the official data at 14:00 GMT.
Bond Yield Spread
The yield on Canada’s 2-year government bonds went as high as 0.578% on August 3rd, after which it closed at 0.558% to remain unchanged compared to August 2nd.
Meanwhile, the yield on US 2-year government bonds climbed as high as 0.691% on August 3rd, after which it fell to 0.671% at the close to lose 1.6 basis points (0.016 percentage point) compared to August 2nd.
The spread between 2-year US and 2-year Canadian bond yields, which reflects the flow of funds in a short term, narrowed to 0.113% on August 3rd from 0.129% on August 2nd. The August 3rd yield spread has been the lowest one since July 20th, when the difference was 0.110%.
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 – 1.3075
R2 – 1.3083
R3 (Range Resistance – Sell) – 1.3091
R4 (Long Breakout) – 1.3114
R5 (Breakout Target 1) – 1.3142
R6 (Breakout Target 2) – 1.3153
S1 – 1.3059
S2 – 1.3051
S3 (Range Support – Buy) – 1.3043
S4 (Short Breakout) – 1.3020
S5 (Breakout Target 1) – 1.2992
S6 (Breakout Target 2) – 1.2981
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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