Yesterday’s trade saw USD/CAD within the range of 1.3362-1.3525. The pair closed at 1.3510, soaring 0.89% on a daily basis, while marking its third consecutive trading day of gains. The daily rate of increase has been the steepest one since November 6th, when the pair advanced 1.06%. The daily high, in addition, has been the highest level since June 28th 2004, when a high of 1.3533 was registered.
At 10:23 GMT today USD/CAD was gaining 0.31% for the day to trade at 1.3544. The pair touched a daily high at 1.3556 at 9:29 GMT, overshooting the range resistance level (R3). It has been the highest level since June 24th 2004, when a daily high of 1.3617 was reached. The pair may encounter resistance at the psychological 1.3600 level and then at the high from June 24th 2004. On the other hand, the psychological 1.3500 level may act as a support and after that – the hourly 55-day EMA.
Falling oil prices continued to mount pressure on the Canadian dollar. Yesterday crude oil futures for January delivery tumbled to as low as $37.50 per barrel, or the lowest since February 20th 2009, when the commodity marked a daily low of $36.91.
On Tuesday USD/CAD trading may be influenced by the macroeconomic reports listed below.
Fundamentals
United States
Job Openings
The number of job openings in the United States probably dropped to 5.525 million in October from a month ago, according to the median forecast by experts. In September 5.526 million job openings were reported, or the most since July. This indicator refers to all job positions that are open, but not filled on the last business day of the month. Job openings are part of the Job Openings and Labor Turnover Survey (JOLTS), which gathers data from about 16 400 non-farm establishments including retailers and manufacturers, as well as federal, state, and local government entities in the 50 states and the District of Columbia. The survey assesses the unmet demand for labor in the labor market. Higher-than-projected number of openings will usually have a limited bullish effect on the US dollar. The Bureau of Labor Statistics is to release the official data at 15:00 GMT.
Canada
Housing starts
Housing starts in Canada probably rose to the seasonally adjusted annual level of 198 700 in November, according to market expectations, from 198 100 in October. The latter has been the lowest number reported since July 2015, when a level of 193 000 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 increased more than expected, this would have a moderate bullish effect on the loonie. Canada’s Mortgage and Housing Corporation is to release the official data at 13:15 GMT.
Building permits
The number of building permits in Canada probably rose 3.2% in October compared to a month ago, according to the median estimate by experts, following three consecutive months of decreases. In September permits, issued by the government, were 6.7% fewer. It has been the sharpest monthly drop since May 2015, when a 14.5% decline was reported. Building permits, as an indicator, provide information regarding demand in Canada’s housing market. In case the number of permits rose more than anticipated, this would have a limited bullish effect on the Canadian dollar. Statistics Canada is to release its monthly report at 13:30 GMT.
Bond Yield Spread
The yield on Canada’s 2-year government bonds went as high as 0.643% on December 7th, after which it closed at 0.601% to lose 2.8 basis points (0.028 percentage point) compared to December 4th. It has been the sixth drop in the past eleven trading days and also a second consecutive one.
The yield on US 2-year government bonds climbed as high as 0.967% on December 7th, after which it closed at 0.935% to lose 1.2 basis points (0.012 percentage point) compared to December 4th. It has been the fourth drop in the past sixteen trading days and also a second consecutive one.
The spread between 2-year US and 2-year Canadian bond yields, which reflects the flow of funds in a short term, widened to 0.334% on December 7th from 0.318% on December 4th. The December 4th yield spread has been the largest one in more than seven months.
Meanwhile, the yield on Canada’s 10-year government bonds soared as high as 1.602% on December 7th, after which it slid to 1.520% at the close to lose 6 basis points (0.06 percentage point) compared to December 4th. It has been the seventh drop in the past eleven trading days and also a second consecutive one.
The yield on US 10-year government bonds climbed as high as 2.292% on December 7th, after which it slipped to 2.236% at the close to lose 3.7 basis points (0.037 percentage point) compared to December 4th. It has been the eleventh drop in the past sixteen trading days and also a second consecutive one.
The spread between 10-year US and 10-year Canadian bond yields widened to 0.716% on December 7th from 0.693% on December 4th. The December 7th yield difference has been the largest one since September 15th, when the spread was 0.720%.
Daily and Weekly Pivot Levels
By employing the Camarilla calculation method, the daily pivot levels for USD/CAD are presented as follows:
R1 – 1.3525
R2 – 1.3540
R3 (range resistance) – 1.3555
R4 (range breakout) – 1.3600
S1 – 1.3495
S2 – 1.3480
S3 (range support) – 1.3465
S4 (range breakout) – 1.3420
By using the traditional method of calculation, the weekly pivot levels for USD/CAD are presented as follows:
Central Pivot Point – 1.3356
R1 – 1.3423
R2 – 1.3484
R3 – 1.3551
S1 – 1.3295
S2 – 1.3228
S3 – 1.3167
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