Yesterday’s trade (in GMT terms) saw USD/CAD within the range of 1.3006-1.3143. The pair closed at 1.3115, rebounding 0.05% from Tuesdays close. It has been the 188th gain in the past 363 trading days, but yet, the smallest one since August 31st. The daily low has been a level not seen since September 22nd, when a low of 1.3000 was registered. The major pair has reduced its drop to 0.10% so far during the current month, following a 0.18% gain in September.
At 8:08 GMT today USD/CAD was edging up 0.43% on the day to trade at 1.3171. The pair touched a daily high at 1.3174 during early European trade, undershooting the upper range breakout level (R4), and a daily low at 1.3109 during the early phase of the Asian trading session.
The loonie gained ground sharply against its US counterpart, hitting a 1-month high, after Bank of Canada left the target for its benchmark interest rate (overnight rate) without change at 0.50% at the policy meeting yesterday in line with market expectations. The Bank Rate was left intact at 0.75%, while the Deposit Rate was kept at 0.25%. According to BoC Statement, global economy was to regain traction during the the second half of 2016 and through the upcoming two years. The central bank now projects Canadian economy will grow 1.1% in 2016 and at a rate of “about 2%” in 2017 and 2018.
As Wednesdays US session progressed, Canadas Dollar completely erased earlier gains.
On Thursday USD/CAD trading may be influenced by the following macroeconomic reports and other events 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 October 14th, probably rose to 250 000, according to market consensus, from 246 000 in the preceding week. The latter has been the lowest number of claims since 1973.
The 4-week moving average, an indicator lacking seasonal effects, was 249 250, marking a decrease by 3 500 compared to the preceding week’s revised down average. It has been the lowest average since November 3rd 1973 (244 000).
The business week, which ended on October 7th, has been the 84th 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 rose to the seasonally adjusted 2 050 000 during the business week ended on October 7th, according to the median forecast by experts, from 2 046 000 in the preceding week. The latter represented a decrease by 16 000 compared to the revised up number of claims reported in the week ended on September 23rd. It has also been the lowest level for insured unemployment since June 24th 2000, when 2 033 000 claims were reported. 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.
Fed’s Dudley speech
At 12:30 GMT the Fed President for New York and also a FOMC member, William Dudley, is to attend a panel discussion with Hong Kong Monetary Authoritys Norman Chan and Bank of Englands Nemat Shafik, at a workshop, which is to examine culture and behavior in the financial services industry in New York.
Existing Home Sales
The index of existing home sales in the United States probably rose 0.4% to a level of 5.35 million in September compared to August, according to the median estimate by experts. In August, sales were 0.9% lower from a month ago to reach 5.33 million, which has been the lowest level since February. Sales of new single-family houses shrank at a monthly rate of 2.3% in August, while sales of condos surged 10.5%. At the same time, the average sales price was 1.0% lower from a month ago.
In case the index rose at a steeper monthly rate than anticipated, this would have a moderate bullish effect on the US dollar. The National Association of Realtors (NAR) is to release the official figure at 14:00 GMT.
Bond Yield Spread
The yield on Canada’s 2-year government bonds went up as high as 0.604% on October 19th, after which it closed at 0.562% to lose 2.7 basis points (0.027 percentage point) compared to October 18th.
Meanwhile, the yield on US 2-year government bonds climbed as high as 0.823% on October 19th, after which it fell to 0.803% at the close to lose 0.001 percentage point compared to October 18th.
The spread between 2-year US and 2-year Canadian bond yields, which reflects the flow of funds in a short term, widened to 0.241% on October 19th from 0.215% on October 18th. The October 19th yield spread has been the largest one since October 13th, when the difference was 0.243%.
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 – 1.3128
R2 – 1.3140
R3 (Range Resistance – Sell) – 1.3153
R4 (Long Breakout) – 1.3190
R5 (Breakout Target 1) – 1.3234
R6 (Breakout Target 2) – 1.3253
S1 – 1.3102
S2 – 1.3090
S3 (Range Support – Buy) – 1.3077
S4 (Short Breakout) – 1.3040
S5 (Breakout Target 1) – 1.2996
S6 (Breakout Target 2) – 1.2977
By using the traditional method of calculation, the weekly levels of importance for USD/CAD are presented as follows:
Central Pivot Point – 1.3183
R1 – 1.3264
R2 – 1.3388
R3 – 1.3469
R4 – 1.3549
S1 – 1.3059
S2 – 1.2978
S3 – 1.2854
S4 – 1.2729
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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