Forex Market: USD/CAD trading outlook for October 12th 2016

Yesterday’s trade (in GMT terms) saw USD/CAD within the range of 1.3163-1.3274. The pair closed at 1.3265, rising 0.68% compared to Mondays close. It has been the 186th gain in the past 357 trading days and also the steepest one since September 23rd. The major pair has extended its advance to 1.04% so far during the current month, following a 0.18% gain in September.

At 8:24 GMT today USD/CAD was edging down 0.38% on the day to trade at 1.3215. The pair touched a daily high at 1.3266 during early Asian trade and a daily low at 1.3209 during the mid phase of the Asian trading session.

On Wednesday USD/CAD trading may be influenced by the following macroeconomic reports and other releases as listed below.

Fundamentals

United States

Job Openings

The number of job openings in the United States probably dropped to 5.724 million in August, according to the median forecast by experts, from 5.871 million during the preceding month. In July, the number of positions waiting to be filled rose mostly in professional and business services (166 000) and durable goods manufacturing (27 000), while decreasing in health care and social assistance (-63 000).

This indicator refers to all job positions that are open, but not filled on the last business day of the month. Job openings are part of the Job Openings and Labor Turnover Survey (JOLTS), which gathers data from about 16 400 non-farm establishments including retailers and manufacturers, as well as federal, state, and local government entities in the 50 states and the District of Columbia. The survey assesses the unmet demand for labor in the labor market. A lower-than-projected level of job openings will usually have a limited bearish effect on the US Dollar. The Bureau of Labor Statistics is to release the official report at 14:00 GMT.

FOMC Minutes

At 18:00 GMT the Federal Open Market Committee (FOMC) will release the minutes from its meeting on policy held on September 20th-21st. The minutes offer detailed insights on FOMC’s monetary policy stance. This release will be closely examined by market players, as it may provide clues over how the Fed’s policy tightening cycle will develop in the future. High volatility of the currency pairs containing the US dollar is usually present after the publication.

The 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.

Bond Yield Spread

The yield on Canada’s 2-year government bonds went up as high as 0.612% on October 11th, or the highest level since July 21st (0.622%), after which it closed at 0.603% to add 1.1 basis points (0.011 percentage point) compared to October 7th.

Meanwhile, the yield on US 2-year government bonds climbed as high as 0.874% on October 11th, after which it fell to 0.869% at the close to lose 0.001 percentage point compared to October 10th.

The spread between 2-year US and 2-year Canadian bond yields, which reflects the flow of funds in a short term, widened to 0.266% on October 11th from 0.246% on October 7th. The October 11th yield spread has been the largest one since October 6th, when the difference was 0.273%.

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 – 1.3275
R2 – 1.3285
R3 (Range Resistance – Sell) – 1.3296
R4 (Long Breakout) – 1.3326
R5 (Breakout Target 1) – 1.3362
R6 (Breakout Target 2) – 1.3377

S1 – 1.3255
S2 – 1.3245
S3 (Range Support – Buy) – 1.3234
S4 (Short Breakout) – 1.3204
S5 (Breakout Target 1) – 1.3168
S6 (Breakout Target 2) – 1.3153

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

Central Pivot Point – 1.3227
R1 – 1.3385
R2 – 1.3473
R3 – 1.3631
R4 – 1.3790

S1 – 1.3139
S2 – 1.2981
S3 – 1.2893
S4 – 1.2806

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