Yesterday’s trade (in GMT terms) saw USD/CAD within the range of 1.3175-1.3250. The pair closed at 1.3219, edging up 0.33% compared to Wednesdays close. It has been the 184th gain in the past 354 trading days. The daily high has been a level unseen since September 28th, when a high of 1.3270 was registered. The major pair has increased its advance to 0.69% so far during the current month, following a 0.18% gain in September.
At 8:36 GMT today USD/CAD was edging up 0.32% on the day to trade at 1.3261. The pair touched a daily high at 1.3266 during early European trade, overshooting the upper range breakout level (R4), and a daily low at 1.3213 during the early phase of the Asian trading session.
On Friday USD/CAD trading may be influenced by the following macroeconomic reports and other events as listed below.
Fundamentals
United States
Fed speakers
At 14:30 GMT Federal Reserve Vice Chair, Stanley Fischer, is to take part in conversation on the economy and federal regulation at the Institute of International Finance Annual Membership Meeting in Washington.
At 16:45 GMT the Fed President for Cleveland and also a FOMC member, Loretta Mester, is to speak on “Fed Communications” at the Shadow Open Market Committee Fall Luncheon Meeting in New York.
At 20:00 GMT Federal Reserve Board Governor, Lael Brainard, is to take a statement on “Blockchain Technology” at the Institute of International Finance Annual Membership Meeting in Washington.
Any remarks in regard to the Bank’s future policy or US macroeconomic environment would heighten USD volatility.
Meanwhile, the International Monetary Fund and the World Bank Group will hold Annual Meetings in Washington on October 7th to October 9th.
Non-farm Payrolls, Unemployment Rate, Average Hourly Earnings
Employers in all sectors of economy in the United States, excluding the farming industry, probably added 175 000 new jobs in September, according to the median forecast by experts, after a job gain of 151 000 in August. July’s figure has been revised up to 275 000 from 255 000 reported previously.
Employment in food services and drinking places rose by 34 000 in August, in health care and social assistance – by 36 000, in professional and technical services – by 20 000 and in financial activities – by 15 000. On the other hand, the US mining industry lost 4 000 jobs in August, employment in manufacturing dropped by 14 000, while in construction – by 6 000.
Total non-farm payrolls account for 80% of the workers, who produce the entire Gross Domestic Product of the United States. In case of a higher-than-expected gain in jobs in September, demand for the US dollar would be strongly supported.
Average Hourly Earnings probably increased 0.2% in September compared to the prior month, according to market expectations, following a 0.1% gain to $25.73 in August. If expectations were met, September would be the seventh consecutive month of earnings increase.
Meanwhile, the rate of unemployment in the country probably remained at 4.9% for a fourth straight month in September, according to market expectations.
The total number of people unemployed remained almost unchanged at 7.8 million in August. Among major groups, the unemployment rates for adult men (4.5%), adult women (4.5%), teenagers (15.7%), Whites (4.4%), Blacks (8.1%), Asians (4.2%), and Hispanics (5.6%) changed little or not at all in August.
The number of long-term unemployed (those looking for employment for 27 weeks or more) remained almost unchanged at 2.0 million during August and comprised 26.1% of the unemployed, according to the BLS. At the same time, the number of persons in part-time employment for economic reasons (involuntary part-time workers) was little changed as well at 6.1 million in August.
In case the unemployment rate met expectations or even fell further, this would have a bullish effect on the US Dollar, because of positive implications for consumer spending. The Bureau of Labor Statistics will release the official employment data at 12:30 GMT.
Canada
Employment Change, Unemployment Rate
The number of the employed people in Canada probably rose by 10 000 in September, according to market expectations, following an increase by 26 200 to 18 049 000 in August. The latter has been the most notable monthly growth since March 2016, when persons in employment were 40 600 more.
The number of employed persons aged 15 to 24 rose by 22 000 in August from a month ago, while employment among those aged 55 and older grew by 29 000. On the other hand, employment among persons aged 25 to 54 dropped by 25 000.
During the same month, employment was higher in public administration (+16 000) and lower in professional, scientific and technical services (-23 000).
Meanwhile, the rate of unemployment in the country probably remained at 7.0% for a second straight month in September, according to the median forecast by analysts. In August, the number of people looking for employment rose by 16 300 to 1 361 000, while the labor force expanded by 42 700 to 19 410 000.
A higher-than-expected rate of increase in employment and a stable or even lower unemployment rate would have a strong bullish effect on the local currency, due to positive implications in regard to consumer spending. Statistics Canada is expected to release the official employment report at 12:30 GMT.
Ivey PMI
Activity among purchasing managers in Canada probably expanded at a slower rate in September from a month ago, with the corresponding seasonally adjusted Purchasing Managers’ Index coming in at a value of 51.9, according to the median forecast by analysts.
In August, the gauge was reported at 52.3, slowing down from 57.0 in July. During the month, the headline index was dragged down by the gauges of employment (sharply down to 46.9 from 59.5 in the preceding month) and prices (down to 56.7 from 57.5 in July). On the other hand, the gauge of inventories accelerated to 61.2 in August from 55.4 in July, while the sub-index of supplier deliveries rose to 46.1 in August from 44.7 in July.
Readings above the key level of 50.0 are indicative of improvement in business conditions, while those below it suggest predominant pessimism (lower activity). In case the PMI matched or came below market expectations, this would have a moderate-to-strong bearish effect on the Canadian dollar. The official index reading is due out at 14:00 GMT.
BoC Business Outlook Survey
At 14:30 GMT Bank of Canada will release the results from its Business Outlook Survey. The latter represents a summary of interviews conducted by the bank’s regional offices with the senior management of about 100 business entities, selected in accordance with the composition of nation’s Gross Domestic Product. The major goal is to reflect the perspectives of these businesses on topics of key interest to the Bank of Canada, including demand and capacity pressures, as well as companies’ forward-looking views on economic activity. The survey encompasses opinions expressed by the respondents, which do not necessarily come in consonance with the Bank’s view or policy.
Bond Yield Spread
The yield on Canada’s 2-year government bonds went up as high as 0.589% on October 6th, or the highest level since September 21st (0.592%), after which it closed at 0.581% to add 0.004 percentage point compared to October 5th.
Meanwhile, the yield on US 2-year government bonds climbed as high as 0.858% on October 6th, or the highest level since June 3rd (0.899%), after which it fell to 0.854% at the close to add 1.6 basis points (0.016 percentage point) compared to October 5th.
The spread between 2-year US and 2-year Canadian bond yields, which reflects the flow of funds in a short term, widened to 0.273% on October 6th from 0.261% on October 5th. The October 6th yield spread has been the largest one since June 5th, when the difference was 0.277%.
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 – 1.3226
R2 – 1.3233
R3 (Range Resistance – Sell) – 1.3240
R4 (Long Breakout) – 1.3260
R5 (Breakout Target 1) – 1.3284
R6 (Breakout Target 2) – 1.3294
S1 – 1.3212
S2 – 1.3205
S3 (Range Support – Buy) – 1.3197
S4 (Short Breakout) – 1.3178
S5 (Breakout Target 1) – 1.3154
S6 (Breakout Target 2) – 1.3144
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
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