Forex Market: USD/CAD daily trading forecast

Written by Miroslav Marinov

Miroslav Marinov, a financial news editor at TradingPedia, is engaged with observing and reporting on the tendencies in the Foreign Exchange Market, as currently his focus is set on the major currencies of eight developed nations worldwide.

, | Updated: October 30, 2024

Friday’s trade saw USD/CAD within the range of 1.2848-1.2941. The pair closed at 1.2911, gaining 0.36% on a daily basis, after two consecutive trading days of losses. The daily low was a higher low compared to the low from Thursday. The latter has been the lowest level since July 15th, when a low of 1.2719 was reached. In weekly terms, USD/CAD lost 0.25% last week, while marking its third straight week of decline. It has been the most modest drop since the week ended on September 13th, when the pair slipped 0.17%.

At 9:31 GMT today USD/CAD was up 0.08% for the day to trade at 1.2922. The pair touched a daily high at 1.2947 during early Asian trade.

Today USD/CAD trading may be influenced by the macroeconomic releases listed below.

Fundamentals

United States

NAHB Housing Market Index

The National Association of Home Builders (NAHB) Housing Market Index probably remained stable in October at a reading of 62.0, according to market expectations. If so, this would be the 15th consecutive month, when the gauge stood in the area above 50.0, while also being the highest level since November 2005. The indicator is based on a monthly survey in regard to current home sales and expected sales in the coming six months. Values above the key level of 50.0 indicate that housing market conditions are good. Therefore, higher-than-projected readings would provide support to the US dollar. The official reading is scheduled for release at 14:00 GMT.

Canadian federal election

Today Canadians elect a 338-member Parliament, from which a government is to be formed.

Correlation with other Majors

Taking into account the week ended on October 18th 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/JPY (0.7586, or strong)
USD/CAD to USD/CHF (0.7355, or strong)
USD/CAD to EUR/USD (-0.1013, or weak)
USD/CAD to AUD/USD (-0.2312, or weak)
USD/CAD to GBP/USD (-0.8912, or very strong)
USD/CAD to NZD/USD (-0.9899, or very strong)

1. During the examined period USD/CAD moved almost equally in the opposite direction compared to GBP/USD and NZD/USD. The correlation between USD/CAD and NZD/USD was almost perfect.

2. USD/CAD moved strongly in one and the same direction with USD/JPY and USD/CHF during the past week.

3. The correlation between USD/CAD and EUR/USD, USD/CAD and AUD/USD was insignificant during the period in question.

Bond Yield Spread

The yield on Canada’s 2-year government bonds went as high as 0.540% on October 16th, after which it slid to 0.537% at the close to remain unchanged compared to October 15th.

The yield on US 2-year government bonds climbed as high as 0.617% on October 16th, or the highest level since October 14th (0.617%), after which it fell to 0.613% at the close to gain 1.2 basis points (0.012 percentage point) compared to October 15th. It has been a second straight trading day of increase.

The spread between 2-year US and 2-year Canadian bond yields, which reflects the flow of funds in a short term, expanded to 0.076% on October 16th from 0.064% during the prior day. The October 16th yield spread has been the largest one since October 13th, when the difference was 0.081%.

Meanwhile, the yield on Canada’s 10-year government bonds soared as high as 1.469% on October 16th, or the highest level since October 13th (1.489%), after which it closed at the exact same level to add 2.7 basis points (0.027 percentage point) compared to October 15th. It has been a second trading day of gains in a row.

The yield on US 10-year government bonds climbed as high as 2.037% on October 16th, or the highest level since October 14th (2.049%), after which it slipped to 2.035% at the close to add 1.6 basis points (0.016 percentage point) compared to October 15th. It has been a second straight trading day of increase.

The spread between 10-year US and 10-year Canadian bond yields narrowed to 0.566% on October 16th from 0.577% during the prior day. The October 16th yield difference has been the lowest one since June 28th, when the spread was 0.434%.