Forex Market: USD/CAD trading outlook for October 4th 2016

Yesterday’s trade (in GMT terms) saw USD/CAD within the range of 1.3068-1.3145. The pair closed at 1.3120, inching down 0.06% compared to Fridays close. It has been the 169th drop in the past 351 trading days and also a second consecutive one. The major pair has gone down 0.06% so far during the current month, following a 0.18% gain in September.

At 8:25 GMT today USD/CAD was edging up 0.30% on the day to trade at 1.3160. The pair touched a daily high at 1.3174 during early European trade, overshooting the upper range breakout level (R4), and a daily low at 1.3111 during the early phase of the Asian trading session.

Crude oil prices closed higher for a fourth straight trading day on October 3rd, which lent support to the loonie. Oil for November delivery climbed as high as $49.02 per barrel yesterday, reaching a level unseen since August 22nd ($49.08).

On Tuesday USD/CAD trading may be influenced by the following event listed below.

Fundamentals

United States

Fed’s Lacker speech

At 12:05 GMT the Fed President for Richmond and also a FOMC member, Jeffrey Lacker, is expected to speak at the West Virginia Economic Outlook Conference in Charleston, WV. Any remarks in regard to the Bank’s future policy or US macroeconomic environment would certainly heighten USD volatility.

Bond Yield Spread

The yield on Canada’s 2-year government bonds went up as high as 0.539% on October 3rd, or the highest level since September 23rd (0.579%), after which it closed at 0.538% to add 1.6 basis points (0.016 percentage point) compared to September 30th.

Meanwhile, the yield on US 2-year government bonds climbed as high as 0.802% on October 3rd, or the highest level since September 21st (0.848%), after which it fell to 0.798% at the close to add 3.2 basis points (0.032 percentage point) compared to September 30th.

The spread between 2-year US and 2-year Canadian bond yields, which reflects the flow of funds in a short term, widened to 0.260% on October 3rd from 0.244% on September 30th. The October 3rd yield spread has been the largest one since June 8th, when the difference was 0.260%.

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 – 1.3127
R2 – 1.3134
R3 (Range Resistance – Sell) – 1.3141
R4 (Long Breakout) – 1.3162
R5 (Breakout Target 1) – 1.3187
R6 (Breakout Target 2) – 1.3197

S1 – 1.3113
S2 – 1.3106
S3 (Range Support – Buy) – 1.3099
S4 (Short Breakout) – 1.3078
S5 (Breakout Target 1) – 1.3053
S6 (Breakout Target 2) – 1.3043

By using the traditional method of calculation, the weekly levels of importance for USD/CAD are presented as follows:

Central Pivot Point – 1.3152
R1 – 1.3257
R2 – 1.3385
R3 – 1.3490
R4 – 1.3594

S1 – 1.3024
S2 – 1.2919
S3 – 1.2791
S4 – 1.2662

In monthly terms, for USD/CAD we have the following pivots:

Central Pivot Point – 1.3077
R1 – 1.3332
R2 – 1.3535
R3 – 1.3790
R4 – 1.4044

S1 – 1.2874
S2 – 1.2619
S3 – 1.2416
S4 – 1.2212