Yesterday’s trade (in GMT terms) saw USD/CAD within the range of 1.2990-1.3126. The pair closed at 1.3058, edging down 0.47% compared to Tuesdays close. It has been the 146th drop in the past 313 trading days and also a third consecutive one. The daily low has been the lowest level since July 19th, when a low of 1.2940 was registered. The major pair has trimmed its advance to 0.24% so far during the current month, following a 0.80% gain in July.
At 7:32 GMT today USD/CAD was inching up 0.08% on the day to trade at 1.3068. The pair touched a daily high at 1.3081 during late Asian trade, undershooting the daily R2 level, and a daily low at 1.3023 during the early phase of the Asian trading session.
Meanwhile, crude oil futures marked their 93rd drop out of the past 168 trading days on August 10th. Oil for September delivery went down as low as $41.42 per barrel and closed at $41.71, plummeting 2.48% compared to Tuesday’s close. As of 8:33 GMT today the commodity was retreating 1.34% to trade at $41.15, after going down as low as $41.10 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 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 August 5th, probably fell to 265 000, according to market consensus, from 269 000 in the preceding week.
The 4-week moving average, an indicator lacking seasonal effects, was 260 250, marking an increase by 3 750 compared to the preceding weeks unrevised average.
The business week, which ended on July 29th, has been the 74th 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 rose to the seasonally adjusted 2 140 000 during the business week ended on July 29th, according to the median forecast by experts, from 2 138 000 in the preceding week. The latter represented a drop by 6 000 compared to the revised up number of claims reported in the week ended on July 15th. 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.
Canada
New Housing Price Index
Selling prices of new homes in Canada probably rose for a 15th straight month in June, up 0.3% from a month ago, according to market expectations. In May compared to April prices went up by another 0.7%, or the fastest monthly increase since July 2007. Home values rose the most in the combined region of Toronto and Oshawa (up at a monthly 1.9%, or the largest in 27 years), as home builders cited market conditions and the higher cost of land as the major reasons for such a performance. In addition, home values went up also in Vancouver (1.1%) and Victoria (1.1%, or the largest since May 2007), as builders explained the advance with current market conditions.
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-to-moderate 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 0.513% on August 10th, after which it closed at 0.508% to remain unchanged compared to August 9th.
Meanwhile, the yield on US 2-year government bonds climbed as high as 0.714% on August 10th, after which it fell to 0.690% at the close to lose 2.4 basis points (0.024 percentage point) compared to August 9th.
The spread between 2-year US and 2-year Canadian bond yields, which reflects the flow of funds in a short term, narrowed to 0.182% on August 10th from 0.206% on August 9th. The August 10th yield spread has been the lowest one since August 4th, when the difference was 0.109%.
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 – 1.3070
R2 – 1.3083
R3 (Range Resistance – Sell) – 1.3095
R4 (Long Breakout) – 1.3133
R5 (Breakout Target 1) – 1.3176
R6 (Breakout Target 2) – 1.3195
S1 – 1.3046
S2 – 1.3033
S3 (Range Support – Buy) – 1.3021
S4 (Short Breakout) – 1.2983
S5 (Breakout Target 1) – 1.2940
S6 (Breakout Target 2) – 1.2921
By using the traditional method of calculation, the weekly levels of importance for USD/CAD are presented as follows:
Central Pivot Point – 1.3123
R1 – 1.3250
R2 – 1.3329
R3 – 1.3456
R4 – 1.3583
S1 – 1.3044
S2 – 1.2917
S3 – 1.2838
S4 – 1.2759
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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