Yesterday’s trade (in GMT terms) saw USD/CAD within the range of 1.3128-1.3210. The pair closed at 1.3195, edging up 0.14% compared to Tuesdays close. It has been the 179th gain in the past 338 trading days and also a second consecutive one. The daily high has been a level unseen since July 27th, when a high of 1.3254 was registered. The major pair has increased its advance to 0.69% so far during the current month, following a 0.59% gain in August.
At 8:14 GMT today USD/CAD was edging up 0.12% on the day to trade at 1.3211. The pair touched a daily high at 1.3237 during early European trade, undershooting the upper range breakout level (R4), and a daily low at 1.3186 during the early phase of the Asian trading session.
Meanwhile, crude oil futures marked their 102nd drop out of the past 192 trading days on September 14th. Oil for October delivery went down as low as $43.42 per barrel, or a level unseen since September 2nd, and closed at $43.58, tumbling 2.94% compared to Tuesday’s close. As of 8:10 GMT today the commodity was edging down 0.11% to trade at $43.53, after going down as low as $43.51 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 September 9th, probably rose to 265 000, according to market consensus, from 259 000 in the preceding week. The latter has been the lowest number of claims since mid-July.
The 4-week moving average, an indicator lacking seasonal effects, was 261 250, marking a decrease by 1 750 compared to the preceding week’s unrevised average.
The business week, which ended on September 2nd, has been the 79th 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 dropped to the seasonally adjusted 2 140 000 during the business week ended on September 2nd, according to the median forecast by experts, from 2 144 000 in the preceding week. The latter represented a decrease by 7 000 compared to the revised down number of claims reported in the week ended on August 19th. 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.
Producer Prices
Annual producer prices in the United States probably rose 0.1% in August, according to the median estimate by experts. In July prices unexpectedly went down at an annual rate of 0.2%. In case annual producer prices rose at a faster rate than anticipated, this would have a limited-to-moderate bullish effect on the US dollar.
The nation’s annualized core producer price inflation, which excludes prices of volatile categories such as food and energy, probably accelerated to 1.0% in August from 0.7% in July. The latter has been the slowest annual increase in the core PPI since January, when the index gained 0.6%. The Bureau of Labor Statistics is expected to report on the official PPI performance at 12:30 GMT.
Retail Sales
Retail sales in the United States probably dropped 0.1% in August from a month ago, according to the median forecast by experts, after unexpectedly remaining flat in July.
Among the 13 major categories, 5 registered growth, 2 registered a decline and 6 recorded no change in July.
In annual terms, retail sales increased 2.3% in July, or at the slowest rate since March, following a 2.7% climb in June.
US core retail sales, or retail sales ex autos, probably rose 0.3% in August compared to a month ago, according to expectations, following a 0.3% slump in July. The latter has been the first drop in five months and also the steepest one since September 2015. This indicator removes large ticket prices and historical seasonality of automobile sales.
In case the general index of sales fell at a sharper rate than anticipated in August, this would have a strong bearish effect on the US dollar. The official report by the US Census Bureau is due out at 12:30 GMT.
Industrial Production
Industrial output in the United States probably shrank 0.3% in August, according to market expectations. In July the index of production surged at a monthly rate of 0.7%, or the fastest since November 2014.
In July, output in the US mining sector rose 0.7%, as increases in the index for oil well drilling and servicing and the index for coal mining neutralized declines in the gauge for oil and gas extraction and that for non-metallic mineral mining.
The gauge for utilities registered a 2.1% monthly surge in July, as demand for air conditioning was bolstered due to warmer-than-usual weather for that period of the year.
Manufacturing production, which accounts for almost three quarters of total industrial production, expanded 0.5% in July from a month ago, as production of durables, non-durables and that in other manufacturing areas (publishing and logging) rose 0.5% each.
A larger-than-projected monthly decline in the index would usually have a moderate bearish effect on the US dollar. The Board of Governors of the Federal Reserve is to release the official production data at 13:15 GMT.
Bond Yield Spread
The yield on Canada’s 2-year government bonds went up as high as 0.602% on September 14th, after which it closed at 0.586% to lose 1.6 basis points (0.016 percentage point) compared to September 13th.
Meanwhile, the yield on US 2-year government bonds climbed as high as 0.802% on September 14th, after which it fell to 0.762% at the close to lose 4 basis points (0.04 percentage point) compared to September 13th.
The spread between 2-year US and 2-year Canadian bond yields, which reflects the flow of funds in a short term, narrowed to 0.176% on September 14th from 0.200% on September 13th. The September 14th yield spread has been the lowest one since September 6th, when the difference was 0.161%.
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 – 1.3203
R2 – 1.3210
R3 (Range Resistance – Sell) – 1.3218
R4 (Long Breakout) – 1.3240
R5 (Breakout Target 1) – 1.3266
R6 (Breakout Target 2) – 1.3277
S1 – 1.3187
S2 – 1.3180
S3 (Range Support – Buy) – 1.3172
S4 (Short Breakout) – 1.3150
S5 (Breakout Target 1) – 1.3124
S6 (Breakout Target 2) – 1.3113
By using the traditional method of calculation, the weekly levels of importance for USD/CAD are presented as follows:
Central Pivot Point – 1.2976
R1 – 1.3128
R2 – 1.3207
R3 – 1.3359
R4 – 1.3512
S1 – 1.2897
S2 – 1.2745
S3 – 1.2666
S4 – 1.2588
In monthly terms, for USD/CAD we have the following pivots:
Central Pivot Point – 1.3024
R1 – 1.3283
R2 – 1.3462
R3 – 1.3721
R4 – 1.3981
S1 – 1.2845
S2 – 1.2586
S3 – 1.2407
S4 – 1.2229
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