Forex Market: USD/CAD trading outlook for Monday (November 7th 2016)

Friday’s trade (in GMT terms) saw USD/CAD within the range of 1.3386-1.3467. The pair closed at 1.3404, inching up 0.05% compared to Thursdays close. It has been the 198th gain in the past 375 trading days and also a third consecutive one. The daily high has been a level not seen since March 4th, when a high of 1.3473 was registered. In weekly terms, USD/CAD added 0.05% to its value during the past week. It has been the 18th gain in the past 44 weeks and also a third consecutive one. The major pair has trimmed its drop to 0.04% so far during the current month, following a 2.14% advance in October.

At 8:45 GMT today USD/CAD was edging down 0.12% on the day to trade at 1.3388. The pair touched a daily high at 1.3397 during early European trade and a daily low at 1.3312 during the early phase of the Asian trading session.

No relevant macroeconomic reports and other events, which may influence USD/CAD trading, are scheduled on Monday.

Correlation with other Majors

Taking into account the business week ended on November 4th and the daily closing levels of the major currency pairs, we come to the following conclusions in regard to the strength of relationship:

USD/CAD to USD/CHF (0.4864, or moderate)
USD/CAD to USD/JPY (0.3197, or moderate)
USD/CAD to GBP/USD (0.1999, or weak)
USD/CAD to NZD/USD (-0.1521, or weak)
USD/CAD to EUR/USD (-0.3314, or moderate)
USD/CAD to AUD/USD (-0.4568, or moderate)

1. During the examined period USD/CAD moved to a moderate extent in one and the same direction with USD/JPY and USD/CHF.

2. The correlation between USD/CAD and GBP/USD, USD/CAD and NZD/USD was insignificant.

3. USD/CAD moved to a moderate extent in the opposite direction compared to EUR/USD and AUD/USD during the past week.

Bond Yield Spread

The yield on Canada’s 2-year government bonds went up as high as 0.556% on November 4th, after which it closed at 0.523% to lose 2.5 basis points (0.025 percentage point) compared to November 3rd.

Meanwhile, the yield on US 2-year government bonds climbed as high as 0.830% on November 4th, after which it fell to 0.798% at the close to lose 1.1 basis points (0.011 percentage point) compared to November 3rd.

The spread between 2-year US and 2-year Canadian bond yields, which reflects the flow of funds in a short term, widened to 0.275% on November 4th from 0.261% on November 3rd. The November 4th yield spread has been the largest one since November 2nd, when the difference was 0.280%.

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 – 1.3411
R2 – 1.3419
R3 (Range Resistance – Sell) – 1.3426
R4 (Long Breakout) – 1.3449
R5 (Breakout Target 1) – 1.3475
R6 (Breakout Target 2) – 1.3485

S1 – 1.3397
S2 – 1.3389
S3 (Range Support – Buy) – 1.3382
S4 (Short Breakout) – 1.3359
S5 (Breakout Target 1) – 1.3333
S6 (Breakout Target 2) – 1.3323

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

Central Pivot Point – 1.3408
R1 – 1.3463
R2 – 1.3522
R3 – 1.3577
R4 – 1.3632

S1 – 1.3349
S2 – 1.3294
S3 – 1.3235
S4 – 1.3176

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

Central Pivot Point – 1.3283
R1 – 1.3560
R2 – 1.3711
R3 – 1.3988
R4 – 1.4265

S1 – 1.3132
S2 – 1.2855
S3 – 1.2704
S4 – 1.2553