Yesterday’s trade saw USD/CAD within the range of 1.3302-1.3433. The pair closed at 1.3315, losing 0.79% on a daily basis and marking the first drop in the past four trading days. The daily rate of decrease has been the steepest one since August 31st, when the cross plunged 0.79%. In addition, the daily low has been the lowest level since September 25th, when a low of 1.3294 was registered.
At 8:57 GMT today USD/CAD was losing 0.27% for the day to trade at 1.3285. The pair overcame the range support level (S3), as it touched a daily low at 1.3264 at 9:04 GMT.
Today the cross may be influenced by a number of macroeconomic reports 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 September 25th, probably increased to 270 000, according to market expectations, from 267 000 in the previous week.
The 4-week moving average, an indicator lacking seasonal effects, was 271 750, marking a decrease of 750 compared to the preceding weeks unrevised average.
The business week, which ended on September 18th has been the 29th consecutive week, when jobless claims stood below the 300 000 threshold.
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 decreased to the seasonally adjusted 2 236 000 during the business week ended on September 18th. If so, it would be the lowest level since the business week ended on July 10th, when 2 207 000 claims were reported. In the week ended on September 11th there were 2 242 000 claims, a figure representing a drop by 1 000 compared to the revised up number of claims, reported in the business week ended on September 4th. 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 Department of Labor is to release the weekly report at 12:30 GMT.
Manufacturing PMI by Markit – final estimate
The final estimate of the Manufacturing Purchasing Managers Index probably fell to 51.3 in September, down from a preliminary value of 53.0, reported on September 23rd. If expectations were met, this would be the lowest PMI reading since October 2012, when the final gauge was reported at 51.0. In August the final seasonally adjusted PMI stood at 53.0, up from a preliminary value of 52.9.
According to preliminary data by Markit, ”latest increase in new work was the weakest since January 2014, which manufacturers linked to greater caution among clients and subdued overall business conditions.”
”New export orders picked up marginally in September, despite widespread reports that the strong dollar had weighed on demand from abroad. Although only slight, the latest rise was the most marked since February. Weaker overall new order growth and heightened uncertainty regarding the global economic outlook encouraged inventory streamlining and more cautious job hiring across the manufacturing sector in September.”
”The latest increase in payroll numbers was only marginal and the weakest since July 2014. A number of firms commented on the nonreplacement of departing staff and efforts to boost productivity at their plants”, Markit stated.
Values above the key level of 50.0 indicate optimism (expanding activity). In case the final PMI slowed down more than anticipated, this would cause a moderate bearish impact on the US dollar. The final reading is due out at 13:45 GMT.
ISM Manufacturing PMI
Activity in United States’ manufacturing sector probably slowed down for a third consecutive month in September, with the corresponding manufacturing PMI coming in at a reading of 50.7, according to expectations, down from 51.1 in August. If so, this would be the lowest PMI reading since May 2013, when the gauge was reported in the area of contraction (49.0).
The New Orders Index came in at 51.7 in August from 56.5 in July. The sub-gauge of production was reported at 53.6, falling from 56.0 in July. The index of employment slid to a value of 51.2 in August from 52.7 in July. The gauge of inventories of raw materials dropped to 48.5 in August from a reading of 49.5 in the previous month. In August, 10 manufacturing industries reported growth, 6 reported contraction and 2 registered no change in conditions, according to data by the Institute for Supply Management (ISM).
In case of a larger-than-expected slowdown in activity, the US dollar would certainly lose appeal. The official PMI reading by the ISM is scheduled for release at 14:00 GMT.
Canada
RBC Manufacturing PMI
At 13:30 GMT Royal Bank of Canada (RBC) is to report on manufacturing activity in September. The corresponding Manufacturing Purchasing Managers Index slid into the area of contraction for the first time in the past three months in August, coming in at 49.4. It has been the lowest PMI level since March 2015, when the gauge was reported at 48.9.
The PMI report is based on data collected from monthly replies to questionnaires sent to supply managers in over 400 industrial companies. The PMI is a compound index based on five individual indexes: new orders, production, employment, delivery time, stocks of purchases. Values of the index above the key level of 50.0 indicate overall increase in activity in the sector, while readings below 50.0 are indicative of contraction in activity. PMIs are earlier indicators of economic conditions published on a monthly basis and are available much before the publication of relevant data from government authorities. This way they provide earlier insight about economic development trends.
In case the gauge went deeper into the zone of contraction in September, this would have a moderate bearish effect on the Canadian dollar.
Bond Yield Spread
The yield on Canadian 2-year government bonds went as high as 0.535% on September 30th, or the highest level since September 28th (0.544%), after which it slid to 0.518% at the close to add 1 basis point 0.01 percentage point compared to September 29th, while marking a second consecutive trading day of gains.
The yield on US 2-year government bonds climbed as high as 0.676% on September 30th, after which it fell to 0.637% at the close to lose 1.6 basis points (0.016 percentage point) compared to September 29th, while marking a third consecutive trading day of decline.
The spread between 2-year US and 2-year Canadian bond yields, which reflects the flow of funds in a short term, shrank to 0.119% on September 30th from 0.145% on September 29th. The September 30th yield difference has been the lowest one since July 8th, when the spread was 0.116%.
Meanwhile, the yield on Canadian 10-year government bonds soared as high as 1.484% on September 30th, or the highest level since September 28th (1.530%), after which it closed at 1.431% to lose 0.003 percentage point compared to September 29th, while marking a third consecutive trading day of decline.
The yield on US 10-year government bonds climbed as high as 2.104% on September 30th, after which it slipped to 2.040% at the close to lose 2 basis points (0.02 percentage point) compared to September 29th, while marking a third straight trading day of decrease.
The spread between 10-year US and 10-year Canadian bond yields shrank to 0.609% on September 30th from 0.626% on September 29th. The September 30th yield difference has been the lowest one since July 3rd, when the spread was 0.573%.
Daily and Weekly Pivot Levels
By employing the Camarilla calculation method, the daily pivot levels for USD/CAD are presented as follows:
R1 – 1.3327
R2 – 1.3339
R3 (range resistance) – 1.3351
R4 (range breakout) – 1.3387
S1 – 1.3303
S2 – 1.3291
S3 (range support) – 1.3279
S4 (range breakout) – 1.3243
By using the traditional method of calculation, the weekly pivot levels for USD/CAD are presented as follows:
Central Pivot Point – 1.3309
R1 – 1.3445
R2 – 1.3554
R3 – 1.3690
S1 – 1.3200
S2 – 1.3064
S3 – 1.2955
TradingPedia.com is a financial media specialized in providing daily news and education covering Forex, equities and commodities. Our academies for traders cover 
