Yesterday’s trade (in GMT terms) saw USD/CAD within the range of 1.3353-1.3427. The pair closed at 1.3390, edging down 0.14% compared to Mondays close. It has been the 177th drop in the past 372 trading days. The daily low has been an exact test of the low from October 28th. The major pair has gone down 0.14% so far during the current month, following a 2.14% advance in October.
At 9:07 GMT today USD/CAD was inching down 0.09% on the day to trade at 1.3378. The pair touched a daily high at 1.3407 during late Asian trade, overshooting the daily R2 level, and a daily low at 1.3370 during the early phase of the European trading session.
On Wednesday USD/CAD trading may be influenced by the following macroeconomic reports and other events as listed below.
Fundamentals
United States
Change in employment by the ADP
Employers in the US non-farm private sector probably added 165 000 new jobs during October, according to the median estimate by experts, following 154 000 new positions added in September. The latter has been the slowest employment growth since April, when the revised down 149 000 new jobs were reported.
In September, employment in the goods-producing sector grew by 3 000, while employment in services increased by 151 000. Employment in trade, transportation and utilities grew by 15 000 during the month, in professional and business services – by 45 000 and in financial activities – by 11 000. Meanwhile, employment in US construction rose by 11 000 and fell by 6 000 in the manufacturing industry.
In case new job growth was higher than expected in October, this would have a moderate-to-strong bullish effect on the US dollar. The official figure is scheduled to be released at 12:15 GMT.
FOMC policy decision
The Federal Open Market Committee (FOMC) will probably keep the target range for the federal funds rate intact between 0.25% and 0.50% at its two-day policy meeting, scheduled to be concluded today, according to the median forecast by experts.
In September, the target range was left intact for a sixth meeting in a row. The FOMC Minutes, released on October 12th, revealed that September’s decision was a close call, while the case for raising rates had become stronger during the past several months, which suggested a hike in 2016 was still a possibility.
”Participants generally agreed that the case for increasing the target range for the federal funds rate had strengthened in recent months. Many of them, however, expressed the view that recent evidence suggested that some slack remained in the labor market. With inflation continuing to run below the Committees 2 percent objective and few signs of increased pressure on wages and prices, most of these participants thought it would be appropriate to await further evidence of continued progress toward the Committees statutory objectives”, the Minutes stated.
”In contrast, some other participants believed that the economy was at or near full employment and inflation was moving toward 2 percent. They maintained that a further delay in raising the target range would unduly increase the risk of the unemployment rate falling markedly below its longer-run normal level, necessitating a more rapid removal of monetary policy accommodation that could shorten the economic expansion. In addition, several participants expressed concern that continuing to delay an increase in the target range implied a further divergence from policy benchmarks based on the Committees past behavior…”
”Some participants believed that it would be appropriate to raise the target range for the federal funds rate relatively soon if the labor market continued to improve and economic activity strengthened, while some others preferred to wait for more convincing evidence that inflation was moving toward the Committees 2 percent objective”, the document revealed.
The FOMC will announce its official decision on policy at 18:00 GMT.
Canada
BoC Wilkins speech
At 17:15 GMT Bank of Canada Senior Deputy Governor, Carolyn Wilkins, is scheduled to attend a panel discussion, which will be hosted by the Ontario Securities Commission. Any remarks in regard to Canada’s macroeconomic environment or the central bank’s monetary policy stance would heighten CAD volatility.
Bond Yield Spread
The yield on Canada’s 2-year government bonds went up as high as 0.571% on November 1st, after which it closed at 0.553% to remain unchanged compared to October 31st.
Meanwhile, the yield on US 2-year government bonds climbed as high as 0.873% on November 1st, or the highest level since October 28th (0.900%), after which it fell to 0.833% at the close to lose 1.2 basis points (0.012 percentage point) compared to October 31st.
The spread between 2-year US and 2-year Canadian bond yields, which reflects the flow of funds in a short term, widened to 0.280% on November 1st from 0.292% on October 31st. The November 1st yield spread has been the lowest one since October 20th, when the difference was 0.271%.
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 – 1.3397
R2 – 1.3404
R3 (Range Resistance – Sell) – 1.3410
R4 (Long Breakout) – 1.3431
R5 (Breakout Target 1) – 1.3454
R6 (Breakout Target 2) – 1.3464
S1 – 1.3383
S2 – 1.3376
S3 (Range Support – Buy) – 1.3370
S4 (Short Breakout) – 1.3349
S5 (Breakout Target 1) – 1.3326
S6 (Breakout Target 2) – 1.3316
By using the traditional method of calculation, the weekly levels of importance for USD/CAD are presented as follows:
Central Pivot Point – 1.3370
R1 – 1.3461
R2 – 1.3526
R3 – 1.3617
R4 – 1.3709
S1 – 1.3305
S2 – 1.3214
S3 – 1.3149
S4 – 1.3085
In monthly terms, for USD/CAD we have the following pivots:
Central Pivot Point – 1.3283
R1 – 1.3560
R2 – 1.3711
R3 – 1.3988
R4 – 1.4265
S1 – 1.3132
S2 – 1.2855
S3 – 1.2704
S4 – 1.2553
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