Yesterday’s trade (in GMT terms) saw USD/CAD within the range of 1.3100-1.3239. The pair closed at 1.3101, shedding 0.67% compared to Tuesdays close. It has been the 163rd drop in the past 343 trading days, a third consecutive one and also the steepest one since September 2nd. The daily low has been a level unseen since September 13th, when a low of 1.3030 was registered. The major pair has neutralized earlier advance and is now down 0.03% so far during the current month, following a 0.59% gain in August.
At 7:50 GMT today USD/CAD was edging down 0.44% on the day to trade at 1.3044. The pair touched a daily high at 1.3105 during early Asian trade, undershooting the daily R1 level, and a daily low at 1.3031 during the early phase of the European trading session.
Meanwhile, crude oil futures marked their 94th gain out of the past 197 trading days on September 21st. Oil for November delivery went up as high as $45.65 per barrel, or a level unseen since September 14th, and closed at $45.34, soaring 2.93% compared to Tuesday’s close. As of 7:43 GMT today the commodity was advancing 0.71% to trade at $45.66, after going up as high as $45.88 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 16th, probably rose to 262 000, according to market consensus, from 260 000 in the preceding week.
The 4-week moving average, an indicator lacking seasonal effects, was 260 750, marking a decrease by 500 compared to the preceding week’s unrevised average. It has been the lowest level in five weeks.
The business week, which ended on September 9th, has been the 80th 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 remained steady at the seasonally adjusted 2 143 000 during the business week ended on September 9th, according to the median forecast by experts. The latter represented an increase by 1 000 compared to the revised down number of claims reported in the week ended on August 26th. 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.
Existing Home Sales
The index of existing home sales in the United States probably rose 1.1% to a level of 5.45 million in August compared to July, according to the median estimate by experts. In July sales were 3.2% lower from a month ago to reach 5.39 million, which has been the first drop in five months. Sales of new single-family houses shrank at a monthly rate of 2% in July, while sales of condos plummeted 12.3%. At the same time, the average sales price was 1.3% lower from a month ago.
In case the index rose at a steeper monthly rate than anticipated, this would have a limited-to-moderate bullish effect on the US dollar. The National Association of Realtors (NAR) is to release the official figure at 14:00 GMT.
Fed keeps target range intact, officials see a stronger case for a hike
The Federal Open Market Committee (FOMC) left the target range for the federal funds rate intact between 0.25% and 0.50% for a sixth consecutive meeting in September, as largely expected. Policy makers said the case for a rate hike this year was stronger, with 3 out of 10 members of the Committee voting in favor of raising borrowing costs. Policy makers revised down their GDP growth forecast for 2016 to 1.8% from 2% as projected in June and revised up their unemployment rate projection to 4.8% from 4.7% in June. At the same time, PCE inflation is now expected to be 1.3%, a revision down from the June forecast (1.4%). Near-term risks to the economic outlook were seen as roughly balanced.
According to extracts from the FOMC Statement, released on September 21st: “Information received since the Federal Open Market Committee met in July indicates that the labor market has continued to strengthen and growth of economic activity has picked up from the modest pace seen in the first half of this year. Although the unemployment rate is little changed in recent months, job gains have been solid, on average.”
“The Committee judges that the case for an increase in the federal funds rate has strengthened but decided, for the time being, to wait for further evidence of continued progress toward its objectives. The stance of monetary policy remains accommodative, thereby supporting further improvement in labor market conditions and a return to 2 percent inflation.”
Bond Yield Spread
The yield on Canada’s 2-year government bonds went up as high as 0.592% on September 21st, after which it closed at 0.576% to add 0.006 percentage point compared to September 20th.
Meanwhile, the yield on US 2-year government bonds climbed as high as 0.848% on September 21st, or the highest level since August 29th (0.853%), after which it fell to 0.791% at the close to add 1.3 basis points (0.013 percentage point) compared to September 20th.
The spread between 2-year US and 2-year Canadian bond yields, which reflects the flow of funds in a short term, widened to 0.215% on September 21st from 0.208% on September 20th. The September 21st yield spread has been the largest one since September 1st, when the difference was 0.223%.
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 – 1.3114
R2 – 1.3126
R3 (Range Resistance – Sell) – 1.3139
R4 (Long Breakout) – 1.3177
R5 (Breakout Target 1) – 1.3222
R6 (Breakout Target 2) – 1.3240
S1 – 1.3088
S2 – 1.3076
S3 (Range Support – Buy) – 1.3063
S4 (Short Breakout) – 1.3025
S5 (Breakout Target 1) – 1.2980
S6 (Breakout Target 2) – 1.2962
By using the traditional method of calculation, the weekly levels of importance for USD/CAD are presented as follows:
Central Pivot Point – 1.3163
R1 – 1.3296
R2 – 1.3382
R3 – 1.3515
R4 – 1.3648
S1 – 1.3077
S2 – 1.2944
S3 – 1.2858
S4 – 1.2772
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
TradingPedia.com is a financial media specialized in providing daily news and education covering Forex, equities and commodities. Our academies for traders cover 
