Friday’s trade saw USD/CAD within the range of 1.3153-1.3317. The pair closed at 1.3307, climbing 1.06% on a daily basis, while marking its third consecutive trading day of gains. The daily rate of increase has been the most notable one since October 21st, when the pair appreciated 1.24%. The daily high, in addition, has been the highest level since October 1st, when a high of 1.3334 was registered. In weekly terms, USD/CAD increased 1.75% in value last week, or the most since the week ended on October 25th, when it went up 1.96%.
At 10:39 GMT today USD/CAD was losing 0.26% for the day to trade at 1.3271. The pair touched a daily low at 1.3262 at 10:41 GMT, which has been an exact test of the range support level (S3).
On Monday USD/CAD trading may be influenced by the macroeconomic reports listed below.
Fundamentals
United States
Federal Reserves Labor Market Conditions Index
At 15:00 GMT on Monday the Federal Reserve Bank is to report on its Labor Market Conditions Index regarding October. In September the gauge slipped to a zero value from 2.1 in the prior month. This index is derived from 19 labor market indicators, as the unemployment rate and the private payrolls are considered to be of the greatest importance. The gauge also encompasses the labor-force participation rate, as well as indicators concerning wages, hiring and dismissals. A reading above the key 0.0 level suggests labor market activity is improving, while a value below it is a signal for worsening conditions. Therefore, readings above 0.0 are usually dollar positive.
Canada
Housing Starts
Housing starts in Canada probably fell to the seasonally adjusted annual level of 200 000 in October, according to market expectations, from 230 700 in September. The latter has been the highest number reported since April 2012, when a level of 243 800 was reached. Housing starts are considered as a key indicator, reflecting the strength of the nation’s housing sector. In case the number of housing starts dropped more than expected, this would have a moderate bearish effect on the loonie. Canada’s Mortgage and Housing Corporation is to release the official data at 13:15 GMT.
Correlation with other Majors
Taking into account the week ended on November 8th 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/JPY (0.9690, or very strong)
USD/CAD to USD/CHF (0.9419, or very strong)
USD/CAD to NZD/USD (-0.8372, or very strong)
USD/CAD to EUR/USD (-0.9332, or very strong)
USD/CAD to GBP/USD (-0.9427, or very strong)
USD/CAD to AUD/USD (-0.9623, or very strong)
1. During the examined period USD/CAD moved almost equally in one and the same direction with USD/CHF and USD/JPY. This relationship has been the most pronounced between USD/CAD and USD/JPY.
2. USD/CAD moved almost equally in the opposite direction compared to NZD/USD, EUR/USD, GBP/USD and AUD/USD during the past week. This relationship has been the most pronounced between USD/CAD and AUD/USD.
Bond Yield Spread
The yield on Canada’s 2-year government bonds went as high as 0.679% on November 6th, or the highest level since June 23rd (0.721%), after which it closed at 0.676% to add 4.6 basis points (0.046 percentage point) compared to November 5th, while marking the eighth consecutive trading day of increase.
The yield on US 2-year government bonds climbed as high as 0.958% on November 6th, or the highest level in at least 1 year, after which it closed at 0.890% to add 6 basis points (0.06 percentage point) compared to November 5th, while marking a fifth 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 0.214% on November 6th from 0.200% on November 5th. The November 6th yield spread has been the largest one since September 18th, when the difference was 0.218%.
Meanwhile, the yield on Canada’s 10-year government bonds soared as high as 1.734% on November 6th, or the highest level since July 13th (1.738%), after which it slid to 1.714% at the close to add 6.6 basis points (0.066 percentage point) compared to November 5th. It has been the seventh gain in the past ten trading days and also a fifth consecutive one.
The yield on US 10-year government bonds climbed as high as 2.349% on November 6th, or the highest level since July 21st (2.403%), after which it slipped to 2.325% at the close to add 8.9 basis points (0.089 percentage point) compared to November 5th, while marking a fifth consecutive trading day of gains.
The spread between 10-year US and 10-year Canadian bond yields expanded to 0.611% on November 6th from 0.588% on November 5th. The November 6th yield difference has been the largest one since October 29th, when the spread was 0.623%.
Daily and Weekly Pivot Levels
By employing the Camarilla calculation method, the daily pivot levels for USD/CAD are presented as follows:
R1 – 1.3322
R2 – 1.3337
R3 (range resistance) – 1.3352
R4 (range breakout) – 1.3397
S1 – 1.3292
S2 – 1.3277
S3 (range support) – 1.3262
S4 (range breakout) – 1.3217
By using the traditional method of calculation, the weekly pivot levels for USD/CAD are presented as follows:
Central Pivot Point – 1.3219
R1 – 1.3405
R2 – 1.3502
R3 – 1.3688
S1 – 1.3122
S2 – 1.2936
S3 – 1.2839
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