Forex Market: USD/CAD trading outlook for Friday (November 18th 2016)

Yesterday’s trade (in GMT terms) saw USD/CAD within the range of 1.3400-1.3516. The pair closed at 1.3507, edging up 0.49% compared to Wednesdays close. It has been the 203rd gain in the past 384 trading days and also the steepest one since November 11th. The major pair has extended its advance to 0.73% during the current month, following a 2.14% surge in October.

At 8:26 GMT today USD/CAD was edging up 0.30% on the day to trade at 1.3548. The pair touched a daily high at 1.3566 during mid-Asian trade, undershooting the upper range breakout level (R4), and a daily low at 1.3506 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 10:30 GMT the Fed President for St. Louis, James Bullard, is expected to participate in the Frankfurt European Banking Congress.

At 14:30 GMT the Fed President for Kansas City, Esther George, is scheduled to speak at the Dallas and Kansas City Feds oil conference in Houston, Texas.

At 14:45 GMT Federal Reserve Governor, Jerome Powell, is scheduled to speak on “The Global Trade Slowdown and Its Implications for Emerging Asia” at the Center for Pacific Basin Studies 2016 Research Conference in San Francisco.

At 17:30 GMT the Fed President for New York, William Dudley, is to give opening remarks at the Economic Press Meeting on Survey of Consumer Expectations at the Federal Reserve Bank of New York.

At 18:30 GMT the Fed President for Dallas, Robert Kaplan, is to attend the Dallas and Kansas City Feds oil conference in Houston, Texas.

Economic outlook or monetary policy-related remarks would heighten USD volatility.

Canada

Consumer Price Inflation

The annualized consumer inflation in Canada probably accelerated to 1.5% in October, according to market expectations, from 1.3% in September. If so, it would be the highest annual inflation since June.

In September, prices of food edged up 0.1% year-on-year, following a 1.1% increase in the previous month. It has been the lowest price gain since February 2000. Consumers also paid more for shelter during the month (a 1.7% year-on-year increase, or matching the rate of growth in July and August), transportation (a 2.3% surge, following a 0.3% increase in the preceding month) and clothing and footwear (a 0.1% gain, following a 0.4% slump in August). On the other hand, cost of gasoline dropped 3.2% in September from a year ago, slowing down from an 11.5% slump in August, according to the report by the Statistics Canada.

Bank of Canada’s (BoC) annualized core inflation, which excludes prices of fruits, vegetables, gasoline, fuel oil, natural gas, mortgages, intercity transportation, and tobacco products, probably remained at 1.8% for a third consecutive month in October, according to market expectations. It has been the lowest rate since July 2014. In July this year core inflation was registered at 2.1%. This is the key measure of inflation, on which the central bank bases its decisions regarding monetary policy. In case the general CPI met expectations or accelerated even further in October, this would have a strong bullish effect on the Canadian dollar. The official CPI report by the Statistics Canada is due out at 13:30 GMT.

Bond Yield Spread

The yield on Canada’s 2-year government bonds went up as high as 0.676% on November 17th, after which it closed at 0.675% to add 1.5 basis points (0.015 percentage point) compared to November 16th.

Meanwhile, the yield on US 2-year government bonds climbed as high as 1.058% on November 17th, or the highest level since December 31st (1.064%), after which it fell to 1.026% at the close to add 2.1 basis points (0.021 percentage point) compared to November 16th.

The spread between 2-year US and 2-year Canadian bond yields, which reflects the flow of funds in a short term, widened to 0.351% on November 17th from 0.345% on November 16th. The November 17th yield spread has been the largest one since March 15th, when the difference was 0.394%.

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 – 1.3518
R2 – 1.3528
R3 (Range Resistance – Sell) – 1.3539
R4 (Long Breakout) – 1.3571
R5 (Breakout Target 1) – 1.3608
R6 (Breakout Target 2) – 1.3624

S1 – 1.3496
S2 – 1.3486
S3 (Range Support – Buy) – 1.3475
S4 (Short Breakout) – 1.3443
S5 (Breakout Target 1) – 1.3406
S6 (Breakout Target 2) – 1.3390

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