Friday’s trade saw USD/CAD within the range of 1.3286-1.3377. The pair closed at 1.3372, going up 0.59% on a daily basis, while extending the gain from Thursday. The daily high has been a lower-high test of the high from November 24th. In weekly terms, USD/CAD added 0.22% last week, which has also been the fourth consecutive week of gains. USD/CAD has appreciated 2.36% so far in the current month.
At 10:06 GMT today USD/CAD was gaining 0.08% for the day to trade at 1.3390. The pair touched a daily high at 1.3394 at 9:11 GMT, undershooting the range resistance level (R3). It has been the highest level since November 23rd, when a daily high of 1.3437 was registered. The latter may be a possible level of resistance for the pair. Support, on the other hand, may be received in the area around 1.3280-1.3290.
On Monday USD/CAD trading may be influenced by the macroeconomic reports listed below.
Fundamentals
United States
Chicago Manufacturing Survey
The Chicago Purchasing Managers Index (PMI) probably slowed down to a reading of 55.0 in November, according to market expectations, from 56.2 during the prior month. The latter has been the highest reading since January 2015, when the PMI came in at 59.4. The index reflects business conditions in the regions manufacturing sector and is interrelated with the Manufacturing Index, published by the Institute for Supply Management (ISM). A reading below the key level of 50.0 is indicative of pessimism (contraction in manufacturing activity). In case the PMI slowed down more than forecast, this would have a moderate bearish effect on the US dollar. The MNI Deutsche Börse Group will release the official reading of the Chicago barometer at 14:45 GMT.
Pending Home Sales
The index of pending home sales in the United States probably rose for the first time in three months in October, going up at a monthly rate of 1.0%, according to the median estimate by experts. In September pending home sales unexpectedly fell 2.3%, or at the sharpest rate since December 2014, when a 3.7% slump was registered.
In annual terms, the index of pending home sales rose 3.0% in September, or at the slowest pace since October 2014, when a climb rate of 2.2% was reported.
When a sales contract is accepted for a property, it is recorded as a pending home sale. As an indicator the index provides information on the number of future home sales, which are in the pipeline. It gathers data from real estate agents and brokers at the point of a sale and is currently the most accurate indicator regarding the US housing sector. It samples over 20% of the market. In addition, over 80% of pending house sales are converted to actual home sales within 2 or 3 months. Therefore, this index has a predictive value about actual home sales.
In case pending home sales increased more than anticipated, this would have a moderate bullish effect on the greenback. The National Association of Realtor’s (NAR) will release the official index value at 15:00 GMT.
Canada
Current Account
The deficit on Canadian current account probably shrank to CAD 15.1 billion during the third quarter of the year, according to market expectations, from CAD 17.4 billion in the preceding quarter. If so, this would be the smallest gap since Q4 2014, when a deficit figure of CAD 13.92 billion was reported. Q3 2015 would also be the 28th consecutive quarter, when the nations current account produced a deficit. A deficit on the current account of a country puts the latter in the position of a net borrower from the rest of the world, as it consumes more than it produces and needs to borrow ”savings” from other countries. This results in a foreign liability.
A smaller-than-anticipated gap would be positive for the Canadian dollar. Statistics Canada is to release the official data at 13:30 GMT.
Correlation with other Majors
Taking into account the week ended on November 29th 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 (0.7868, or strong)
USD/CAD to USD/CHF (0.3831, or moderate)
USD/CAD to EUR/USD (-0.3349, or moderate)
USD/CAD to GBP/USD (-0.4752, or moderate)
USD/CAD to AUD/USD (-0.8970, or very strong)
USD/CAD to NZD/USD (-0.9428, or very strong)
1. During the examined period USD/CAD moved strongly in one and the same direction with USD/JPY.
2. USD/CAD moved almost equally in the opposite direction compared to AUD/USD and NZD/USD during the past week.
3. USD/CAD moved to a moderate extent in one and the same direction with USD/CHF, while moving to a moderate extent in the opposite direction compared to EUR/USD and GBP/USD.
Bond Yield Spread
The yield on Canada’s 2-year government bonds went as high as 0.631% on November 27th, after which it closed at the exact same level to add 0.006 percentage point compared to November 26th. It has been the sixth gain in the past ten trading days.
The yield on US 2-year government bonds climbed as high as 0.942% on November 27th, after which it closed at 0.926% to lose 0.008 percentage point compared to November 26th. It has been the first drop in the past ten trading days.
The spread between 2-year US and 2-year Canadian bond yields, which reflects the flow of funds in a short term, shrank to 0.295% on November 27th from 0.309% on November 26th. The November 27th yield spread has been the lowest one since November 19th, when the difference was 0.273%.
Meanwhile, the yield on Canada’s 10-year government bonds soared as high as 1.575% on November 27th, after which it slid to 1.568% at the close to lose 0.006 percentage point compared to November 26th. It has been the eleventh drop in the past fifteen trading days.
The yield on US 10-year government bonds climbed as high as 2.231% on November 27th, after which it slipped to 2.222% at the close to lose 0.002 percentage point compared to November 26th. It has been the fifth consecutive trading day of decrease.
The spread between 10-year US and 10-year Canadian bond yields widened to 0.654% on November 27th from 0.650% on November 26th. The November 27th yield difference has been the largest one since September 24th, when the spread was 0.659%.
Daily and Weekly Pivot Levels
By employing the Camarilla calculation method, the daily pivot levels for USD/CAD are presented as follows:
R1 – 1.3380
R2 – 1.3390
R3 (range resistance) – 1.3397
R4 (range breakout) – 1.3422
S1 – 1.3364
S2 – 1.3354
S3 (range support) – 1.3347
S4 (range breakout) – 1.3322
By using the traditional method of calculation, the weekly pivot levels for USD/CAD are presented as follows:
Central Pivot Point – 1.3362
R1 – 1.3447
R2 – 1.3523
R3 – 1.3608
S1 – 1.3286
S2 – 1.3201
S3 – 1.3125
TradingPedia.com is a financial media specialized in providing daily news and education covering Forex, equities and commodities. Our academies for traders cover 
