Friday’s trade saw USD/CAD within the range of 1.3294-1.3356. The pair closed at 1.3337, up 0.27% on a daily basis. It has been the sixth gain in the past seven trading days. In weekly terms, USD/CAD appreciated 0.83%, following two consecutive weeks of losses. It has been the most notable weekly gain since the week ended on July 19th, when the pair added 2.47%.
At 8:55 GMT today USD/CAD was losing 0.05% for the day to trade at 1.3330. The pair touched a daily low at 1.3318 at 7:40 GMT, testing the range support level (S3).
Today the cross may be influenced by a number of macroeconomic reports as listed below.
Fundamentals
United States
Personal Income, Personal Spending
Personal spending in the United States probably rose for a fourth straight month in August, up 0.3%, according to market expectations, while personal income was probably up for a fifth consecutive month in August, increasing at a monthly rate of 0.4%. Consumer spending, which accounts for over two thirds of the nations GDP, rose 0.3% in July.
At the same time, personal income increased 0.4% during the same month, while disposable personal income (DPI) rose USD 61.5 billion (or 0.5%). Private wages and salaries increased USD 32.7 billion in July, compared to a surge by USD 11.0 billion in June. Government wages and salaries went up by USD 3.1 billion in July, following a USD 3.3 billion increase in the preceding month.
Higher-than-expected rates of increase imply good employment conditions and, therefore, are dollar positive. The Bureau of Economic Analysis is to publish the official figures at 12:30 GMT.
Pending Home Sales
The index of pending home sales in the United States probably rose 0.2% in August compared to July, according to the median estimate by experts, following another 0.5% increase in the prior month.
In annual terms, the index of pending home sales rose 7.2% in July, or at the slowest pace since December 2014, when a climb rate of 6.1% was reported.
When a sales contract is accepted for a property, it is recorded as a pending home sale. As an indicator the index provides information on the number of future home sales, which are in the pipeline. It gathers data from real estate agents and brokers at the point of a sale and is currently the most accurate indicator regarding the US housing sector. It samples over 20% of the market. In addition, over 80% of pending house sales are converted to actual home sales within 2 or 3 months. Therefore, this index has a predictive value about actual home sales.
In case pending home sales increased more than anticipated in August, this would have a moderate bullish effect on the greenback. The National Association of Realtor’s (NAR) will release the official index value at 14:00 GMT.
Correlation with other Majors
Taking into account the week ended on September 27th 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 (0.8948, or very strong)
USD/CAD to EUR/USD (0.4074, or moderate)
USD/CAD to NZD/USD (0.4023, or moderate)
USD/CAD to USD/JPY (0.1353, or weak)
USD/CAD to AUD/USD (-0.9126, or very strong)
USD/CAD to GBP/USD (-0.9398, or very strong)
1. During the examined period USD/CAD moved almost equally in one and the same direction with USD/CHF, while moving almost equally in the opposite direction compared to AUD/USD and GBP/USD.
2. The correlation between USD/CAD and USD/JPY was insignificant during the past week.
3. USD/CAD moved to a moderate extent in one and the same direction with EUR/USD and NZD/USD during the period in question.
Bond Yield Spread
The yield on Canadian 2-year government bonds went as high as 0.561% on September 25th, or the highest level since June 30th (0.584%), after which it slid to 0.542% at the close to add 3.2 basis point (0.032 percentage point) compared to September 24th.
The yield on US 2-year government bonds climbed as high as 0.743% on September 25th, or the highest level since September 17th (0.815%), after which it fell to 0.700% at the close to add 1.2 basis points (0.012 percentage point) 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, shrank to 0.158% on September 25th from 0.178% on September 24th. The September 25th yield difference has been the lowest one since July 3rd, when the spread was 0.084%.
Meanwhile, the yield on Canadian 10-year government bonds soared as high as 1.546% on September 25th, or the highest level since September 21st (1.552%), after which it closed at 1.525% to add 5.6 basis points (0.056 percentage point) compared to September 24th.
The yield on US 10-year government bonds climbed as high as 2.198% on September 25th, or the highest level since September 22nd (2.198%), after which it slipped to 2.166% at the close to add 3.8 basis points (0.038 percentage point) on a daily basis.
The spread between 10-year US and 10-year Canadian bond yields shrank to 0.641% on September 25th from 0.659% on September 24th. The September 25th yield difference has been the lowest one since July 3rd, when the spread was 0.573%.
Daily and Weekly Pivot Levels
By employing the Camarilla calculation method, the daily pivot levels for USD/CAD are presented as follows:
R1 – 1.3343
R2 – 1.3348
R3 (range resistance – green on the 1-hour chart) – 1.3354
R4 (range breakout – red on the 1-hour chart) – 1.3371
S1 – 1.3331
S2 – 1.3326
S3 (range support – green on the 1-hour chart) – 1.3320
S4 (range breakout – red on the 1-hour chart) – 1.3303
By using the traditional method of calculation, the weekly pivot levels for USD/CAD are presented as follows:
Central Pivot Point – 1.3309
R1 – 1.3445
R2 – 1.3554
R3 – 1.3690
S1 – 1.3200
S2 – 1.3064
S3 – 1.2955
TradingPedia.com is a financial media specialized in providing daily news and education covering Forex, equities and commodities. Our academies for traders cover 
