Yesterday’s trade saw USD/CAD within the range of 1.3151-1.3262. The pair closed at 1.3257, gaining 0.37% on a daily basis. The daily low has been the lowest level since September 3rd, when a low of 1.3133 was recorded.
At 9:49 GMT today USD/CAD was losing 0.31% for the day to trade at 1.3218. The pair overshot the lower range breakout level (S4), as it touched a daily low at 1.3187 at 8:00 GMT.
Today the cross may be influenced by a number of macroeconomic reports and events as listed below.
Fundamentals
United States
Initial, Continuing Jobless Claims
The number of people in the United States, who filed for unemployment assistance for the first time during the business week ended on September 4th, probably fell to 275 000, according to market expectations, from 282 000 in the prior week. The latter has been the largest number of claims since the business week ended on July 3rd, when 297 000 claims were reported.
The 4-week moving average, an indicator lacking seasonal effects, was 275 500, marking an increase of 3 250 compared to the preceding week’s revised down average.
The business week, which ended on August 28th has been the 26th consecutive week, when jobless claims stood below the 300 000 threshold. This continues to support the case labor market conditions in the country follow the path of improvement.
Initial jobless claims number is a short-term indicator, reflecting lay-offs in the country. In case the number of claims met expectations or dropped further, this would have a moderate bullish effect on the US dollar.
The number of continuing jobless claims probably decreased to the seasonally adjusted 2 250 000 during the business week ended on August 28th from 2 257 000 in the prior week. The latter represented a decrease by 9 000 compared to the revised down number of claims, reported in the business week ended on August 15th. This indicator reflects the actual number of people unemployed and currently receiving unemployment benefits, who filed for unemployment assistance at least two weeks ago.
The Department of Labor is to release the weekly report at 12:30 GMT.
Canada
New Housing Price Index
Selling prices of new homes in Canada probably rose for a fourth straight month in August, up 0.2%, according to market expectations. In July compared to June prices went up 0.3%. Home values climbed at a rate of 1.3% in July compared to the same month a year ago, or at the fastest annual rate since March, when a 1.4% surge was reported. The New Housing Price Index is a key indicator, reflecting the health of Canadian housing market. In case prices surged more than anticipated, this would be an indication of a strong demand and would, therefore, have a limited bullish effect on the loonie. Statistics Canada will release the official data at 12:30 GMT.
Bond Yield Spread
The yield on Canadian 2-year government bonds went as high as 0.480% on September 9th, or the highest level since July 15th (0.508%), after which it slid to 0.459% at the close to lose 2.5 basis points (0.025 percentage point) compared to September 8th. It has been the first gain in the past three trading days.
The yield on US 2-year government bonds climbed as high as 0.765% on September 9th, or the highest level since June 17th (0.766%), after which it fell to 0.737% at the close to remain unchanged for the day.
The spread between 2-year US and 2-year Canadian bond yields, which reflects the flow of funds in a short term, narrowed to 0.278% on September 9th from 0.303% on September 8th. The September 9th yield difference has been the lowest one since September 4th, when the spread was 0.268%.
Meanwhile, the yield on Canadian 10-year government bonds soared as high as 1.530% on September 9th, or the highest level since July 30th (1.548%), after which it closed at 1.491% to add 2 basis points (0.02 percentage point) compared to September 8th. It has been a second consecutive trading day of increase.
The yield on US 10-year government bonds climbed as high as 2.254% on September 9th, or the highest level since August 7th (2.254%), after which it slipped to 2.185% at the close to lose 0.001 percentage point on a daily basis. It has been the first drop in the past three trading days.
The spread between 10-year US and 10-year Canadian bond yields narrowed to 0.694% on September 9th from 0.715% on September 8th. The September 9th yield difference has been the lowest one since September 4th, when the spread was 0.692%.
Daily and Weekly Pivot Levels
By employing the Camarilla calculation method, the daily pivot levels for USD/CAD are presented as follows:
R1 – 1.3267
R2 – 1.3277
R3 (range resistance – green on the 1-hour chart) – 1.3288
R4 (range breakout – red on the 1-hour chart) – 1.3318
S1 – 1.3247
S2 – 1.3237
S3 (range support – green on the 1-hour chart) – 1.3226
S4 (range breakout – red on the 1-hour chart) – 1.3196
By using the traditional method of calculation, the weekly pivot levels for USD/CAD are presented as follows:
Central Pivot Point – 1.3242
R1 – 1.3371
R2 – 1.3458
R3 – 1.3587
S1 – 1.3155
S2 – 1.3026
S3 – 1.2939
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