Friday’s trade (in GMT terms) saw USD/CAD within the range of 1.2773-1.2893. The pair closed at 1.2871, rising 0.70% compared to Thursdays close. It has been the 168th gain in the past 320 trading days. In weekly terms, USD/CAD lost 0.63% of its value during the past week. It has been the 22nd drop in the past 33 weeks and also a second consecutive one. The major pair has pared its slump to 1.21% so far during the current month, following a 0.80% gain in July.
At 8:23 GMT today USD/CAD was edging up 0.29% on the day to trade at 1.2908. The pair touched a daily high at 1.2931 during early European trade, undershooting the upper range breakout level (R4), and a daily low at 1.2873 during the early phase of the Asian trading session.
Meanwhile, crude oil futures marked their 82nd gain out of the past 175 trading days on August 19th. Oil for October delivery went up as high as $49.36 per barrel, or the highest price level since June 30th, and closed at $49.11, advancing 0.45% compared to Thursday’s close. As of 8:21 GMT today the commodity was losing 1.43% to trade at $48.41, after going down as low as $48.12 per barrel earlier. Crude oil prices and CAD valuation tend to be strongly positively correlated.
On Monday USD/CAD trading may be influenced by the following macroeconomic report listed below.
Fundamentals
Canada
Wholesale Sales
Wholesale sales in Canada probably rose 0.5% in June compared to a month ago, according to market expectations. In May compared to April the value of sales made by wholesalers in the country increased 1.8%, or the most since December 2015. Higher wholesale sales are indicative of a more active retail trade and, respectively, consumption. Therefore, a larger-than-projected increase in sales would have a limited-to-moderate bullish effect on the Canadian Dollar. Statistics Canada is to release the official data at 12:30 GMT.
Correlation with other Majors
Taking into account the business week ended on August 19th 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/CHF (0.9261, or very strong)
USD/CAD to USD/JPY (0.9034, or very strong)
USD/CAD to AUD/USD (-0.2347, or weak)
USD/CAD to NZD/USD (-0.7818, or strong)
USD/CAD to EUR/USD (-0.8692, or very strong)
USD/CAD to GBP/USD (-0.9249, or very strong)
1. During the examined period USD/CAD moved strongly in the opposite direction compared to NZD/USD.
2. USD/CAD moved almost equally in one and the same direction with USD/JPY and USD/CHF during the past week. This relationship has been the most pronounced between USD/CAD and USD/CHF.
3. USD/CAD moved almost equally in the opposite direction compared to EUR/USD and GBP/USD during the period in question. This relationship has been the most pronounced between USD/CAD and GBP/USD.
4. The correlation between USD/CAD and AUD/USD was insignificant.
Bond Yield Spread
The yield on Canada’s 2-year government bonds went as high as 0.588% on August 19th, after which it closed at 0.575% to add 0.002 percentage point compared to August 18th.
Meanwhile, the yield on US 2-year government bonds climbed as high as 0.754% on August 19th, after which it fell to 0.750% at the close to add 4 basis points (0.04 percentage point) compared to August 18th.
The spread between 2-year US and 2-year Canadian bond yields, which reflects the flow of funds in a short term, widened to 0.175% on August 19th from 0.137% on August 18th. The August 19th yield spread has been the largest one since August 16th, when the difference was 0.183%.
Daily, Weekly and Monthly Pivot Levels
By employing the Camarilla calculation method, the daily levels of importance for USD/CAD are presented as follows:
R1 – 1.2882
R2 – 1.2893
R3 (Range Resistance – Sell) – 1.2904
R4 (Long Breakout) – 1.2937
R5 (Breakout Target 1) – 1.2976
R6 (Breakout Target 2) – 1.2992
S1 – 1.2860
S2 – 1.2849
S3 (Range Support – Buy) – 1.2838
S4 (Short Breakout) – 1.2805
S5 (Breakout Target 1) – 1.2766
S6 (Breakout Target 2) – 1.2750
By using the traditional method of calculation, the weekly levels of importance for USD/CAD are presented as follows:
Central Pivot Point – 1.2871
R1 – 1.2977
R2 – 1.3084
R3 – 1.3190
R4 – 1.3297
S1 – 1.2764
S2 – 1.2658
S3 – 1.2551
S4 – 1.2445
In monthly terms, for USD/CAD we have the following pivots:
Central Pivot Point – 1.3038
R1 – 1.3244
R2 – 1.3460
R3 – 1.3666
R4 – 1.3872
S1 – 1.2822
S2 – 1.2616
S3 – 1.2400
S4 – 1.2184
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