Yesterday’s trade (in GMT terms) saw USD/CAD within the range of 1.2902-1.2959. The pair closed at 1.2927, edging up 0.10% compared to Tuesdays close. It has been the 170th gain in the past 323 trading days. The major pair has trimmed its slump to 0.78% so far during the current month, following a 0.80% gain in July.
At 8:41 GMT today USD/CAD was inching down 0.09% on the day to trade at 1.2915. The pair touched a daily high at 1.2938 during early Asian trade, overshooting the daily R2 level, and a daily low at 1.2908 during the early phase of the European trading session.
Meanwhile, crude oil futures marked their 95th drop out of the past 178 trading days on August 24th. Oil for October delivery went down as low as $46.45 per barrel, or its lowest level since August 17th ($45.84), and closed at $46.77, retreating 2.77% compared to Tuesday’s close. As of 8:38 GMT today the commodity was inching up 0.06% to trade at $46.80, after going up as high as $47.01 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 19th, probably rose to 265 000, according to market consensus, from 262 000 in the preceding week. The latter has been the lowest number of claims since the business week ended on July 15th, when the revised down 252 000 claims were reported.
The 4-week moving average, an indicator lacking seasonal effects, was 265 250, marking an increase by 2 500 compared to the preceding week’s unrevised average.
The business week, which ended on August 12th, has been the 76th consecutive week, when jobless claims stood below the 300 000 threshold, which suggested a healthy labor market. It has been the longest streak since 1970.
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 fell to the seasonally adjusted 2 153 000 during the business week ended on August 12th, according to the median forecast by experts, from 2 175 000 in the preceding week. The latter represented an increase by 15 000 compared to the revised up number of claims reported in the week ended on July 29th. 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.
Durable Goods Orders
The value of durable goods orders in the United States probably rebounded after two consecutive months of decline, going up 3.3% in July from a month ago, according to the median forecast by experts. In June orders fell at a revised down monthly rate of 3.9% (-4.0% previously).
The value of shipments of manufactured durable goods, up in two out of the past three months, rose 0.4% (or USD 0.9 billion) in June to reach USD 232.5 billion. The value of unfilled orders for manufactured durable goods, down after three straight months of expansion, fell 0.9% (or USD 9.7 billion) in June to reach USD 1,127.9 billion. At the same time, the value of inventories of manufactured durable goods, down in 11 out of the past 12 months, shrank 0.2% (or USD 0.7 billion) during the period to USD 381.5 billion, according to data by the US Census Bureau.
Non-defense new orders for capital goods dropped 11.3% (or USD 8.2 billion) in June to USD 64.8 billion, while defense new orders for capital goods slumped 20.7% (or USD 1.9 billion) during the month to USD 7.3 billion.
The value of durable goods orders, excluding transportation, probably rose 0.5% in July from a month ago, according to expectations, following a revised down 0.4% drop in June. If expectations were met, this would be the fastest monthly increase since April, when core orders went up at a revised up 0.5%.
In case the general index went up at a faster-than-projected pace, this would have a strong bullish effect on the US dollar, due to positive implications in regard to the wider gauge of production, factory orders. The US Census Bureau is scheduled to release the official report at 12:30 GMT.
Services PMI by Markit – preliminary reading
Activity in the US sector of services probably increased at a faster rate in August from a month ago, with the corresponding preliminary Purchasing Managers’ Index coming in at a reading of 52.0, according to the median forecast by experts, from a final 51.4 in July. If expectations were met, this would be the highest PMI level since April, when the gauge came in at 52.8. According to Markit, in July the gauge of new orders rose at a slower pace, employment in services picked up slightly, while business sentiment improved notably compared to the all-time low in June.
The PMI is based on data collected from a representative panel of more than 400 private sector companies, which encompasses industries such as transport and communication, financial intermediaries, business and personal services, computing & IT and hotels & restaurants. Values above the key level of 50.0 indicate predominant optimism (expansion in general activity). In case a faster than-expected expansion in services sector activity is reported, this would have a moderate bullish effect on the US dollar, as services contribute to a considerable portion of the US GDP. The preliminary reading by Markit Economics is due out at 13:45 GMT.
Bond Yield Spread
The yield on Canada’s 2-year government bonds went as high as 0.578% on August 24th, after which it closed at 0.573% to add 1.6 basis points (0.016 percentage point) compared to August 23rd.
Meanwhile, the yield on US 2-year government bonds climbed as high as 0.770% on August 24th, after which it fell to 0.769% at the close to add 2.3 basis points (0.023 percentage point) compared to August 23rd.
The spread between 2-year US and 2-year Canadian bond yields, which reflects the flow of funds in a short term, widened to 0.196% on August 24th from 0.189% on August 23rd. The August 24th yield spread has been the largest one since August 11th, when the difference was 0.208%.
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 – 1.2932
R2 – 1.2937
R3 (Range Resistance – Sell) – 1.2943
R4 (Long Breakout) – 1.2958
R5 (Breakout Target 1) – 1.2977
R6 (Breakout Target 2) – 1.2984
S1 – 1.2922
S2 – 1.2917
S3 (Range Support – Buy) – 1.2911
S4 (Short Breakout) – 1.2896
S5 (Breakout Target 1) – 1.2877
S6 (Breakout Target 2) – 1.2870
By using the traditional method of calculation, the weekly levels of importance for USD/CAD are presented as follows:
Central Pivot Point – 1.2871
R1 – 1.2977
R2 – 1.3084
R3 – 1.3190
R4 – 1.3297
S1 – 1.2764
S2 – 1.2658
S3 – 1.2551
S4 – 1.2445
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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