Yesterday’s trade (in GMT terms) saw USD/CAD within the range of 1.3405-1.3507. The pair closed at 1.3441, inching down 0.04% compared to Tuesdays close. It has been the 181st drop in the past 383 trading days and also a second consecutive one. The daily low has been a level not seen since November 10th, when a low of 1.3377 was registered. The major pair has trimmed its advance to 0.24% during the current month, following a 2.14% surge in October.
At 8:16 GMT today USD/CAD was inching down 0.05% on the day to trade at 1.3434. The pair touched a daily high at 1.3452 during early European trade, overshooting the daily R1 level, and a daily low at 1.3415 during the early phase of the Asian trading session.
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 November 11th, probably rose to 257 000, according to market consensus, from 254 000 in the preceding week. The latter has been the lowest number of claims since the business week ended on October 7th.
The 4-week moving average, an indicator lacking seasonal effects, was 259 750, marking an increase by 1 750 compared to the preceding week’s revised up average.
The business week, which ended on November 4th, has been the 88th 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 fell to the seasonally adjusted 2 038 000 during the business week ended on November 4th, according to the median forecast by experts, from 2 041 000 in the preceding week. The latter represented an increase by 18 000 compared to the revised down number of claims reported in the week ended on October 21st. 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 13:30 GMT.
Housing Starts and Building Permits
The number of housing starts in the United States probably rose 7.0% to 1.156 million units in October, according to market expectations, from the seasonally adjusted annual rate of 1.047 million during the prior month. The latter has been the lowest number of starts since March 2015, when a revised up level of 0.944 million was reported. In September, starts of single-family houses rose at a monthly rate of 8.1% to 783 000, while starts of buildings with five units or more plummeted 38.9% to reach 250 000. During the month, housing starts marked the largest drop in the Northeast area (-36% to 87 000), followed by those in the Midwest (-14.1% to 146 000) and those in the South region (-5.3% to 532 000). On the other hand, starts remained unchanged at 282 000 in the West.
Meanwhile, the number of building permits in the country probably shrank 2.9% to 1.198 million in October from an annual level of 1.225 million in September. The latter has been the highest level since November 2015, when the revised down 1.282 million units were reported. Single-family authorizations went up at a monthly rate of 0.4% to reach 739 000 units in September, while permits for buildings with five units or more were reported to have increased 17.2% to 449 000. Authorizations were fewer in the Midwest area (-5.2%), while increasing in the South (2.6%), in the West (15.8%) and in the Northeast region (23.6%).
In case a higher-than-anticipated figure for either of the two indicators is reported, this would have a moderate bullish effect on the US dollar. The official housing data are due out at 13:30 GMT.
Consumer Price Index
The annualized consumer inflation in the United States probably accelerated to 1.6% in October, according to market expectations, from 1.5% in the preceding month. If so, this would be the highest inflation rate since October 2014. In monthly terms, the Consumer Price Index (CPI) probably rose 0.4% in October, according to the market consensus, following a 0.3% increase in the prior month.
In September, cost of food dropped 0.3% from a year ago, following a flat performance in August. It has been the first decrease since February 2010. Cost of transportation services rose 3.0% year-on-year in September, decelerating from 3.1% in August, cost of shelter surged 3.4% year-on-year, matching the rate of increase in August, while cost of medical care soared at an annual 4.8%, slowing down from 5.1% in August, according to the report by the Bureau of Labor Statistics. On the other hand, cost of energy fell 2.9% in September compared to the same month a year earlier, slowing down from a 9.2% drop in August.
The annualized core consumer inflation, which is stripped of prices of food and energy, probably remained stable at 2.2% in October, according to market expectations. In August, the Core CPI rose 2.3% year-on-year.
If the general CPI tends to approach the inflation objective, set by the Federal Reserve and considered as providing price stability, or a level below but close to 2%, this would usually heighten the appeal of the US dollar, as it increases the probability of monetary policy tightening.
The Bureau of Labor Statistics is to release the official CPI report at 13:30 GMT.
Fed speakers
At 13:50 GMT the Fed President for New York, William Dudley, is to attend the Global Research Forum on International Macroeconomics and Finance, which will be hosted by the Federal Reserve Bank of New York.
At 15:00 GMT Federal Reserve Chair, Janet Yellen, is scheduled to testify on US economic outlook in front of the Joint Economic Committee of Congress in Washington D.C.
At 17:30 GMT Federal Reserve Governor, Lael Brainard, is to speak in New York on “The Evolution of Work and the Increase in Alternative Work Arrangements at the Forum on the Evolution of Work” sponsored by the Federal Reserve Bank of New York, Federal Reserve Board of Governors and the Freelancers Union.
At 19:45 GMT the Fed President for Chicago, Charles Evans, is to attend a conference in Chicago.
Bond Yield Spread
The yield on Canada’s 2-year government bonds went up as high as 0.678% on November 16th, after which it closed at 0.660% to lose 0.002 percentage point compared to November 15th.
Meanwhile, the yield on US 2-year government bonds climbed as high as 1.030% on November 16th, or the highest level since January 4th (1.036%), after which it fell to 0.997% at the close to lose 0.004 percentage point compared to November 15th.
The spread between 2-year US and 2-year Canadian bond yields, which reflects the flow of funds in a short term, narrowed to 0.337% on November 16th from 0.339% on November 15th. The November 16th yield spread has been the lowest one since November 14th, when the difference was 0.334%.
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 – 1.3450
R2 – 1.3460
R3 (Range Resistance – Sell) – 1.3469
R4 (Long Breakout) – 1.3497
R5 (Breakout Target 1) – 1.3530
R6 (Breakout Target 2) – 1.3543
S1 – 1.3432
S2 – 1.3422
S3 (Range Support – Buy) – 1.3413
S4 (Short Breakout) – 1.3385
S5 (Breakout Target 1) – 1.3352
S6 (Breakout Target 2) – 1.3339
By using the traditional method of calculation, the weekly levels of importance for USD/CAD are presented as follows:
Central Pivot Point – 1.3453
R1 – 1.3643
R2 – 1.3739
R3 – 1.3929
R4 – 1.4118
S1 – 1.3357
S2 – 1.3167
S3 – 1.3071
S4 – 1.2974
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
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