Forex Market: USD/CAD daily trading outlook

Yesterday’s trade saw USD/CAD within the range of 1.3280-1.3326. The pair closed at 1.3296, ticking up 0.07% on a daily basis. It has been the first gain in the past three trading days. The daily low was a higher-low test of the low from Wednesday and also a test of the relatively tight area of support, which has formed during the week.

At 10:19 GMT today USD/CAD was gaining 0.31% for the day to trade at 1.3335. The pair touched a daily high at 1.3347 at 10:20 GMT, overcoming the upper range breakout level (R4). It has been the highest level since November 24th, when a high of 1.3378 was registered. The latter may act as a short-term resistance for the pair.

On Friday USD/CAD trading may be influenced by one macroeconomic report listed below.

Fundamentals

Canada

Producer prices

Prices of industrial products in Canada probably dropped for a third consecutive month in October, down at a monthly rate of 0.1%, according to expectations. In August and September prices were down 0.3%, which followed three successive months of increases. This index measures the change in prices of industrial goods, sold by manufacturers in the country. It is also used as an indicator of commodity inflation. In case a larger-than-anticipated decrease in prices is reported, this would have a limited bearish effect on the local dollar, as the latter tends to be sensitive to changes in commodity prices. Statistics Canada is to release the official data at 13:30 GMT.

Bond Yield Spread

The yield on Canada’s 2-year government bonds went as high as 0.630% on November 26th, after which it closed at 0.625% to lose 0.004 percentage point compared to November 25th. It has been the ninth drop in the past fourteen trading days.

The yield on US 2-year government bonds climbed as high as 0.938% on November 26th, after which it closed at 0.934% to remain unchanged compared to November 25th. It followed eight consecutive trading days of increase.

The spread between 2-year US and 2-year Canadian bond yields, which reflects the flow of funds in a short term, widened to 0.309% on November 26th from 0.305% on November 25th. The November 26th yield spread has been the largest one since November 24th, when the difference was 0.310%.

Meanwhile, the yield on Canada’s 10-year government bonds soared as high as 1.590% on November 26th, after which it slid to 1.574% at the close to lose 1.6 basis points (0.016 percentage point) compared to November 25th. It has been the tenth drop in the past fourteen trading days.

The yield on US 10-year government bonds climbed as high as 2.225% on November 26th, after which it slipped to 2.224% at the close to lose 0.001 percentage point compared to November 25th. It has been the fourth consecutive trading day of decrease.

The spread between 10-year US and 10-year Canadian bond yields widened to 0.650% on November 26th from 0.644% on November 25th. The November 26th yield difference has been the largest one since September 28th, when the spread was 0.653%.

Daily and Weekly Pivot Levels

By employing the Camarilla calculation method, the daily pivot levels for USD/CAD are presented as follows:

R1 – 1.3300
R2 – 1.3305
R3 (range resistance) – 1.3311
R4 (range breakout) – 1.3321

S1 – 1.3292
S2 – 1.3287
S3 (range support) – 1.3282
S4 (range breakout) – 1.3270

By using the traditional method of calculation, the weekly pivot levels for USD/CAD are presented as follows:

Central Pivot Point – 1.3319
R1 – 1.3396
R2 – 1.3449
R3 – 1.3526

S1 – 1.3266
S2 – 1.3189
S3 – 1.3136