Yesterday’s trade saw USD/CAD within the range of 1.3368-1.3458. The pair closed at 1.3421, up 0.16% on a daily basis, while marking a third straight trading day of gains. It has been the most modest daily rate of increase since September 22nd. In addition, the daily high has been the highest level since June 30th 2004, when a high of 1.3502 was registered.
At 9:38 GMT today USD/CAD was losing 0.13% for the day to trade at 1.3405. The pair overshot the range support level (S3), as it touched a daily low at 1.3393 at 8:40 GMT.
Today the cross may be influenced by a number of macroeconomic reports and other events as listed below.
Fundamentals
United States
Change in Employment by ADP
Employers in the US non-farm private sector probably added 195 000 new jobs during September, according to the median estimate by experts, following 190 000 new positions added in August. If so, this would be the largest gain in jobs since June, when 237 000 positions were added. The employment report by Automated Data Processing Inc. (ADP) is based on data that encompasses 400 000 – 500 000 companies employing over 24 million people, working in the 19 major sectors of the economy. The ADP employment change indicator is calculated in accordance with the same methodology, which the Bureau of Labor Statistics (BLS) uses. Published two days ahead of the governments employment statistics, this report is used by traders as a reliable predictor of the official non-farm payrolls data. Creation of jobs has a direct link to consumer spending, while the latter is a major driving force behind economic growth. Therefore, in case new jobs growth came above expectations, 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.
Fed Chair Yellens statement
At 19:00 GMT Federal Reserves Chair Janet Yellen is to take a statement. Moderate-to-high volatility of the dollar crosses is usually present during her speeches.
Canada
Gross Domestic Product
Canadian real Gross Domestic Product (GDP) probably expanded 0.2% in July compared to a month ago, according to the median forecast by experts, slowing down from a 0.5% surge in June. The latter has been the fastest monthly rate of increase since May 2014 and was supported by segments such as mining, quarrying, and oil and gas extraction (a 3.1% expansion), wholesale trade (a 1% expansion), finance and insurance (up 0.7%), arts and entertainment (up 6.4%). Additional positive GDP contribution was provided by manufacturing sector activity, with output there expanding 0.4% in June. The increase was driven by higher chemical, food and textile, clothing and leather production. On the other hand, construction output shrank 0.6% in June, according to data by Statistics Canada.
In case monthly GDP growth slowed down more than anticipated in July, this would have a moderate bearish effect on the loonie. The official report is due out at 12:30 GMT.
Bond Yield Spread
The yield on Canadian 2-year government bonds went as high as 0.518% on September 29th, after which it slid to 0.508% at the close to add 0.002 percentage point compared to September 28th.
The yield on US 2-year government bonds climbed as high as 0.684% on September 29th, after which it fell to 0.653% at the close to lose 1.9 basis points (0.019 percentage point) compared to September 28th, while marking a second consecutive trading day of decline.
The spread between 2-year US and 2-year Canadian bond yields, which reflects the flow of funds in a short term, shrank to 0.145% on September 29th from 0.166% on September 28th. The September 29th yield difference has been the lowest one since July 8th, when the spread was 0.116%.
Meanwhile, the yield on Canadian 10-year government bonds soared as high as 1.468% on September 29th, after which it closed at 1.434% to lose 1.1 basis points (0.011 percentage point) compared to September 28th, while marking a second consecutive trading day of decline.
The yield on US 10-year government bonds climbed as high as 2.120% on September 29th, after which it slipped to 2.061% at the close to lose 3.7 basis points (0.037 percentage point) compared to September 28th, while marking a second straight trading day of decrease.
The spread between 10-year US and 10-year Canadian bond yields widened to 0.627% on September 29th from 0.653% on September 28th. The September 29th 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 – 1.3429
R2 – 1.3438
R3 (range resistance) – 1.3446
R4 (range breakout) – 1.3471
S1 – 1.3413
S2 – 1.3405
S3 (range support) – 1.3396
S4 (range breakout) – 1.3372
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
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