Yesterday’s trade saw USD/CAD within the range of 1.3041-1.3193. The pair closed at 1.3147, surging 0.67% on a daily basis, or at the sharpest rate since October 27th, when it appreciated 0.87%. It has been the third gain in the past eight trading days. The daily high was an exact test of the high from October 30th.
On Wednesday USD/CAD received a boost following an array of upbeat US macroeconomic data and Federal Reserve Chair Janet Yellens comments. During her testimony in front of the House Financial Services Committee yesterday, Yellen said the US economy was “performing well”, while an increase in the target range for the federal funds rate in December was a “live possibility”, if macroeconomic conditions remained on track.
At 10:20 GMT today USD/CAD was gaining 0.19% for the day to trade at 1.3175. The pair touched a daily high at 1.3178 at 8:00 GMT, which overshot the daily R2 level.
According to Binary Tribunes analysis on historical volatility, the average intraday volatility for the pair was 0.877% in October, or the highest since August, when average volatility was estimated at 0.985%. At the same time, the average daily volatility for USD/CAD was 0.797% in October, or the lowest one since December 2014. Back then the average daily volatility was estimated at 0.788%.
On Thursday USD/CAD trading may be influenced by the macroeconomic reports 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 30th, probably increased to 264 000, according to market expectations, from 260 000 in the previous week. If so, this would be the highest number of claims since the business week ended on September 25th.
The 4-week moving average, an indicator lacking seasonal effects, was 259 250, marking a decrease of 4 000 compared to the preceding week’s unrevised average. It has been the lowest level for this average since December 15th 1973, when 256 750 claims were reported.
The business week, which ended on October 23rd has been the 34th 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 remained unchanged at the seasonally adjusted 2 144 000 during the business week ended on October 23rd. It has been the lowest number of claims since the week ended on November 4th 2000, when a level of 2 110 000 was reported. The figure represented a decrease by 37 000 compared to the revised up number of claims reported in the week ended on October 9th. 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.
Canada
Ivey PMI
Activity among purchasing managers in Canada probably improved in October, with the corresponding seasonally adjusted Purchasing Managers Index coming in at a value of 54.0. If so, October would be the seventh consecutive month, when the index inhabited the area above 50.0. In September the gauge was reported at a level of 53.7. This indicator is based on a survey sponsored by Richard Ivey School of Business and Canadian Purchasing Management Association. It encompasses 175 respondents in both the public and the private sector, selected in accordance with their geographic location and activity, so that the entire economy is covered. Activity among purchasing managers is closely watched by market players, as managers usually have an early access to data regarding performance of their companies, which could be used as a leading indicator of overall economic activity. Readings at the key level of 50.0 are indicative of no change in business conditions, while those above it suggest optimism (expanding activity). In case the PMI demonstrated a larger-than-expected improvement, this would have a moderate-to-strong bullish effect on the Canadian dollar. The official index reading is due out at 15:00 GMT.
Bond Yield Spread
The yield on Canada’s 2-year government bonds went as high as 0.628% on November 4th, or the highest level since June 29th (0.635%), after which it closed at 0.623% to add 2.4 basis points (0.024 percentage point) compared to November 3rd, while marking the sixth consecutive trading day of increase.
The yield on US 2-year government bonds climbed as high as 0.853% on November 4th, after which it closed at 0.849% to add 7.9 basis points (0.079 percentage point) compared to November 3rd, while marking a third trading day of gains in a row.
The spread between 2-year US and 2-year Canadian bond yields, which reflects the flow of funds in a short term, widened to 0.226% on November 4th from 0.171% on November 3rd. The November 4th yield spread has been the largest one since September 16th, when the difference was 0.280%.
Meanwhile, the yield on Canada’s 10-year government bonds soared as high as 1.648% on November 4th, or the highest level since July 15th (1.681%), after which it slid to 1.634% at the close to add 1.8 basis points (0.018 percentage point) compared to November 3rd. It has been the fifth gain in the past eight trading days and also a third consecutive one.
The yield on US 10-year government bonds climbed as high as 2.241% on November 4th, or the highest level since September 17th (2.298%), after which it slipped to 2.227% at the close to add 0.009 percentage point compared to November 3rd, while marking a third consecutive trading day of gains.
The spread between 10-year US and 10-year Canadian bond yields narrowed for a second day in a row to reach 0.593% on November 4th from 0.602% on November 3rd. The November 4th yield difference has been the lowest one since October 23rd, when the spread was 0.581%.
Daily and Weekly Pivot Levels
By employing the Camarilla calculation method, the daily pivot levels for USD/CAD are presented as follows:
R1 – 1.3161
R2 – 1.3175
R3 (range resistance) – 1.3189
R4 (range breakout) – 1.3231
S1 – 1.3133
S2 – 1.3119
S3 (range support) – 1.3105
S4 (range breakout) – 1.3063
By using the traditional method of calculation, the weekly pivot levels for USD/CAD are presented as follows:
Central Pivot Point – 1.3137
R1 – 1.3222
R2 – 1.3366
R3 – 1.3451
S1 – 1.2993
S2 – 1.2908
S3 – 1.2764
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