Yesterday’s trade saw USD/CAD within the range of 1.2804-1.2983. The pair closed at 1.2815, plummeting 0.91% on a daily basis. It has been the 54th drop in the past 110 trading days and also a second consecutive one. The daily low has been the lowest level since May 12th, when a low of 1.2768 was registered. The major pair has gone down 2.11% so far in June, following a 4.31% surge in the prior month.
At 7:07 GMT today USD/CAD was inching down 0.02% on the day to trade at 1.2812. The pair touched a daily high at 1.2840 during the mid phase of the Asian trading session, undershooting the daily R2 level, and a daily low at 1.2801 at 6:19 GMT.
Canadas dollar tested highs unseen since mid-May against its US counterpart, as crude oil futures registered highs unseen since May 31st on Monday. Crude oil marked its 66th gain out of the past 121 trading days on June 6th. Oil for July delivery went up as high as $49.90 per barrel and closed at $49.65, surging 2.11% compared to Friday’s close. As of 7:15 GMT today the commodity was edging up 0.18% to trade at $49.74, after going up as high as $49.76 per barrel earlier.
On Tuesday USD/CAD trading may be influenced by the following macroeconomic reports as listed below.
Fundamentals
United States
Consumer Credit Change
The money amounts, borrowed by US consumers probably increased by USD 19.00 billion in April, according to market expectations, following a surge by USD 29.67 billion in March. Non-revolving credit expanded by USD 18.58 billion in March, following a surge by USD 11.24 billion in February. At the same time, revolving credit rose by USD 11.10 billion in March, following an increase by USD 2.91 billion in the preceding month.
Given the current state of the economy, a higher-than-expected amount borrowed is usually considered as dollar positive, as it implies a potential increase in consumer spending and accelerated growth, respectively. The Board of Governors of the Federal Reserve is to release the official numbers at 19:00 GMT.
Canada
Ivey PMI
Activity among purchasing managers in Canada probably increased at a faster pace in May from a month ago, with the corresponding seasonally adjusted Purchasing Managers Index coming in at a value of 54.2. In April the gauge was reported at a level of 53.1. If expectations were met, April would be the fifth consecutive month of activity expansion, while the reading itself would be the highest since January, when the PMI was reported at 66.0. In April the index was supported by a surge in inventories, while the sub-gauge for prices increased at a slower rate. The sub-gauge for employment, on the other hand, fell for the first time since October 2015.
This indicator is based on a survey sponsored by Richard Ivey School of Business and the Canadian Purchasing Management Association. It encompasses 175 respondents in both the public and the private sector, selected in accordance with their geographic location and activity, so that the entire economy is covered. Activity among purchasing managers is closely watched by market players, as managers usually have an early access to data regarding performance of their companies, which could be used as a leading indicator of overall economic activity. Readings above the key level of 50.0 are indicative of improvement in business conditions, while those below it suggest predominant pessimism (lower activity). In case the PMI matched or even came above market expectations, this would have a moderate-to-strong bullish effect on the Canadian dollar. The official index reading is due out at 14:00 GMT.
Yellen expresses confidence in economic development
During her speech at the World Affairs Council of Philadelphia yesterday, Fed Chair Janet Yellen said that despite the weak job growth in all US economic segments with the exclusion of the farming industry in May, an encouraging aspect of the report was that average hourly earnings increased 2.5% over the past 12 months, or slightly outpacing performance in recent years. The latter, according to Yellen, may serve as an indication that wage growth in the country may finally be picking up.
“…although the economy recently has been affected by a mix of countervailing forces, I see good reasons to expect that the positive forces supporting employment growth and higher inflation will continue to outweigh the negative ones. As a result, I expect the economic expansion to continue, with the labor market improving further and GDP growing moderately. And as I just noted, I expect to see inflation moving up to 2 percent over the next couple of years”, Yellen emphasized.
“My overall assessment is that the current stance of monetary policy is generally appropriate, in that it is providing support to the economy by encouraging further labor market improvement that will help return inflation to 2 percent. At the same time, I continue to think that the federal funds rate will probably need to rise gradually over time to ensure price stability and maximum sustainable employment in the longer run.”
Daily and Weekly Pivot Levels
By employing the Camarilla calculation method, the daily pivot levels for USD/CAD are presented as follows:
R1 – 1.2831
R2 – 1.2848
R3 (range resistance) – 1.2864
R4 (range breakout) – 1.2913
S1 – 1.2799
S2 – 1.2782
S3 (range support) – 1.2766
S4 (range breakout) – 1.2717
By using the traditional method of calculation, the weekly pivot levels for USD/CAD are presented as follows:
Central Pivot Point – 1.2997
R1 – 1.3082
R2 – 1.3231
R3 – 1.3316
S1 – 1.2848
S2 – 1.2763
S3 – 1.2614
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