Yesterday’s trade saw USD/CAD within the range of 1.2965-1.3056. The pair closed at 1.2963, edging down 0.13% compared to Tuesdays close. It has been the 133rd drop in the past 288 trading days. The daily high has been the highest level since June 28th. The major pair has edged up 0.15% so far during the current month, following a 1.29% slump in June.
At 7:38 GMT today USD/CAD was edging down 0.10% on the day to trade at 1.2950. The pair touched a daily high at 1.2984 during the early phase of the Asian trading session, overshooting the daily R2 level, and a daily low at 1.2942 at 7:08 GMT.
Meanwhile, crude oil futures marked their 66th gain out of the past 143 trading days on July 6th. Oil for August delivery went up as high as $47.95 per barrel and closed at $47.77, gaining 0.72% compared to Tuesday’s close. As of 7:51 GMT today the commodity was up 0.70% to trade at $47.76, after going up as high as $47.81 per barrel earlier.
On Thursday USD/CAD trading may be influenced by the following macroeconomic reports as listed below.
Fundamentals
United States
Employment Change by ADP
Employers in the US non-farm private sector probably added 160 000 new jobs during June, according to the median estimate by experts, following 173 000 new positions added in May.
Employment in the goods-producing sector dropped by 1 000, while employment in services increased by 175 000 in May. Construction and financial activities added 13 000 job positions each, trade/transportation/utilities – 28 000, while professional/business activities – 43 000. On the other hand, employment in manufacturing decreased 3 000.
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 the US economic growth. In case new jobs growth outpaced 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.
Initial, Continuing Jobless Claims
The number of people in the United States, who filed for unemployment assistance for the first time during the business week ended on July 1st, probably rose to 270 000, according to market consensus, from 268 000 in the preceding week.
The 4-week moving average, an indicator lacking seasonal effects, was 266 750, marking no change compared to the preceding weeks revised down average.
The business week, which ended on June 24th has been the 69th consecutive week, when jobless claims stood below the 300 000 threshold, which suggested a healthy labor market. It has been the longest streak in 43 years.
Initial jobless claims number is a short-term indicator, reflecting lay-offs in the country. In case the number of claims met expectations or increased further, this would have a moderate bearish effect on the US dollar.
The number of continuing jobless claims probably dropped to the seasonally adjusted 2 113 000 during the business week ended on June 24th, according to the median forecast by experts, from 2 120 000 in the preceding week. The latter represented a drop by 20 000 compared to the revised down number of claims reported in the week ended on June 10th. This indicator reflects the actual number of people unemployed and currently receiving unemployment benefits, who filed for unemployment assistance at least two weeks ago.
The US Department of Labor is to release the weekly report at 12:30 GMT.
Canada
Building Permits
The overall value of building permits in Canada, issued by municipalities, probably increased 2.0% in May, according to expectations. The total value of building permits in the country edged down 0.3% to reach CAD 6.9 billion in April compared to a month ago, due to lower construction intentions in Ontario, Quebec and Nova Scotia. The value of residential permits went down 1.8% to CAD 4.3 billion, while the value of non-residential permits rose 2.5% to reach CAD 2.5 billion during the period.
Building permits, as an indicator, provide information regarding demand in Canada’s housing sector. In case the total value of permits increased more than expected in May from a month earlier, this would have a limited-to-moderate bullish effect on the Canadian Dollar. Statistics Canada is expected to release the official numbers at 12:30 GMT.
Ivey PMI
Activity among purchasing managers in Canada probably expanded in June from a month ago, with the corresponding seasonally adjusted Purchasing Managers Index coming in at a value of 51.0. In May the gauge was reported at a level of 49.4, marking the first contraction in five months. During the month the index was dragged down by a slump in the gauges for inventories (49.6 down from 52.3 in April) and employment (49.3 down from 49.9 in the prior month). On the other hand, the gauge for supplier deliveries rose to 53.3 in May from 46.8 in April, while the gauge for prices continued its advance, reaching 63.1 in May from 53.9 in April.
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.
Bond Yield Spread
The yield on Canada’s 2-year government bonds went as high as 0.495% on July 6th, after which it closed at 0.485% to lose 0.008 percentage point compared to July 5th.
Meanwhile, the yield on US 2-year government bonds climbed as high as 0.589% on July 6th, after which it fell to 0.581% at the close to add 2.7 basis points (0.027 percentage point) compared to July 5th.
The spread between 2-year US and 2-year Canadian bond yields, which reflects the flow of funds in a short term, widened to 0.096% on July 6th from 0.061% on July 5th. The July 6th yield spread has been the highest one since June 28th, when the difference was 0.114%.
Daily, Weekly and Monthly Pivot Levels
By employing the Camarilla calculation method, the daily pivot levels for USD/CAD are presented as follows:
R1 – 1.2971
R2 – 1.2980
R3 (range resistance) – 1.2989
R4 (range breakout) – 1.3013
S1 – 1.2955
S2 – 1.2946
S3 (range support) – 1.2938
S4 (range breakout) – 1.2913
By using the traditional method of calculation, the weekly pivot levels for USD/CAD are presented as follows:
Central Pivot Point – 1.2963
R1 – 1.3068
R2 – 1.3225
R3 – 1.3330
S1 – 1.2806
S2 – 1.2701
S3 – 1.2544
In monthly terms, for USD/CAD we have the following pivots:
Central Pivot Point – 1.2950
R1 – 1.2987
R2 – 1.3050
R3 – 1.3087
S1 – 1.2887
S2 – 1.2850
S3 – 1.2787
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