Yesterday’s trade (in GMT terms) saw USD/CAD within the range of 1.3362-1.3404. The pair closed at 1.3397, inching up 0.03% compared to Wednesdays close. It has been the 197th gain in the past 374 trading days. The major pair has trimmed its drop to 0.09% so far during the current month, following a 2.14% advance in October.
At 9:39 GMT today USD/CAD was inching up 0.04% on the day to trade at 1.3403. The pair touched a daily high at 1.3419 during early European trade, undershooting the upper range breakout level (R4), and a daily low at 1.3386 during the early phase of the Asian trading session.
On Friday USD/CAD trading may be influenced by the following macroeconomic reports and other events as listed below.
Fundamentals
United States
Non-farm Payrolls, Unemployment Rate, Average Hourly Earnings
Employers in all sectors of economy in the United States, excluding the farming industry, probably added 175 000 new jobs in October, according to the median forecast by experts, after a job gain of 156 000 in September. August’s figure has been revised up to 167 000 from 151 000 reported previously.
Employment in food services and drinking places rose by 30 000 in September, in health care and social assistance – by 33 000, in professional and business services – by 67 000 and in retail trade – by 22 000. On the other hand, employment in other segments of the economy such as construction, manufacturing, wholesale trade, transportation and warehousing, information, financial activities and government was little changed during the same month.
Total non-farm payrolls account for 80% of the workers, who produce the entire Gross Domestic Product of the United States. In case of a higher-than-expected gain in jobs in October, demand for the US dollar would be strongly supported.
Average Hourly Earnings probably increased 0.3% in October compared to the prior month, according to market expectations, following a 0.2% gain to $25.79 in September. If expectations were met, October would be the eighth consecutive month of earnings increase.
Meanwhile, the rate of unemployment in the country probably dropped to 4.9% in October, according to market expectations, from 5.0% in September.
The total number of people unemployed went up by 90 000 to 7.9 million in September. Among major groups, the unemployment rate for Hispanics rose to 6.4% in September, while the rates for adult men (4.7%), adult women (4.4%), teenagers (15.8%), Whites (4.4%), Blacks (8.3%) and Asians (3.9%) changed little or not at all in September.
The number of long-term unemployed (those looking for employment for 27 weeks or more) remained almost unchanged at 2.0 million during September and comprised 24.9% of the unemployed, according to the BLS. At the same time, the number of persons in part-time employment for economic reasons (involuntary part-time workers) was little changed as well at 5.9 million in September.
In case the unemployment rate met expectations, this would have a strong bullish effect on the US Dollar, because of positive implications for consumer spending. The Bureau of Labor Statistics will release the official employment data at 12:30 GMT.
Fed speakers
At 12:45 GMT the Fed President for Atlanta, Dennis Lockhart, is to take a statement at the National Association of Realtors conference in Orlando, Florida.
At 15:00 GMT the Fed President for Dallas, Robert Kaplan, is expected to speak at Association of Banks of Mexico forum in Mexico City.
At 20:00 GMT Federal Reserve Vice Chairman, Stanley Fischer, is to speak on policy changes after the Great Recession at the International Monetary Fund.
Any hints in regard to the Bank’s meeting in December would certainly heighten USD volatility.
Canada
Employment Change, Unemployment Rate
The number of the employed people in Canada probably fell by 10 000 in October, according to market expectations, following an increase by 67 200 in September. The latter has been the most notable monthly growth since September 2014, when persons in employment were 74 100 more.
The number of employed persons aged 15 to 24 went down by 35 000 in September from a month ago, while employment among those aged 55 and older grew by 19 000. On the other hand, employment among persons aged 25 to 54 remained stable.
During the same month, full-time employment rose by 23 000 and part-time employment went up by 44 100.
Meanwhile, the rate of unemployment in the country probably remained at 7.0% for a third straight month in October, according to the median forecast by analysts. In September, the number of people looking for employment rose by 2 000 to 1 363 100, while the labor force expanded by 69 000 to 19 479 700.
A lower-than-expected rate of decrease in employment and a stable or even lower unemployment rate would have a strong bullish effect on the local currency, due to positive implications in regard to consumer spending. Statistics Canada is expected to release the official employment report at 12:30 GMT.
Ivey PMI
Activity among purchasing managers in Canada probably expanded at a slower rate in October from a month ago, with the corresponding seasonally adjusted Purchasing Managers’ Index coming in at a value of 56.3, according to a forecast by Trading Economics.
In September, the gauge was reported at 58.4, or the highest reading since January, accelerating from 52.3 in August. During the month, the headline index was supported by the gauges of employment (sharply up to 54.0 from 46.9 in the preceding month) and supplier deliveries (up to 51.7 from 46.1 in August). On the other hand, the gauge of inventories decelerated to 46.7 in September from 61.2 in August, while the sub-index of prices was almost unchanged.
Readings above the key level of 50.0 are indicative of improvement in business conditions, while those below it suggest predominant pessimism (lower activity). In case the PMI matched or came below forecast, this would have a moderate-to-strong bearish effect on the Canadian dollar. The official index reading is due out at 14:00 GMT.
Bond Yield Spread
The yield on Canada’s 2-year government bonds went up as high as 0.553% on November 3rd, after which it closed at 0.548% to add 0.003 percentage points compared to November 2nd.
Meanwhile, the yield on US 2-year government bonds climbed as high as 0.829% on November 3rd, after which it fell to 0.809% at the close to lose 1.6 basis points (0.016 percentage point) compared to November 2nd.
The spread between 2-year US and 2-year Canadian bond yields, which reflects the flow of funds in a short term, narrowed to 0.261% on November 3rd from 0.280% on November 2nd. The November 3rd yield spread has been the lowest one since October 19th, when the difference was 0.241%.
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 – 1.3401
R2 – 1.3405
R3 (Range Resistance – Sell) – 1.3410
R4 (Long Breakout) – 1.3420
R5 (Breakout Target 1) – 1.3434
R6 (Breakout Target 2) – 1.3439
S1 – 1.3393
S2 – 1.3389
S3 (Range Support – Buy) – 1.3385
S4 (Short Breakout) – 1.3374
S5 (Breakout Target 1) – 1.3360
S6 (Breakout Target 2) – 1.3355
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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