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Forex Market: USD/CAD daily trading outlook

Friday’s trade (in GMT terms) saw USD/CAD within the range of 1.2988-1.3090. The pair closed at 1.3043, edging up 0.31% compared to Thursdays close. It has been the 157th gain in the past 290 trading days and also a second consecutive one. The daily high has been the highest level since June 28th, when a high of 1.3109 was registered. In weekly terms, USD/CAD added 0.98% to its value during the past week. It has been the 9th gain in the past 27 weeks and also the steepest one since the week ended on May 22nd, when the pair appreciated 1.33%. The major pair has increased its advance to 1.12% so far during the current month, following a 1.29% slump in June.

At 8:01 GMT today USD/CAD was edging up 0.31% on the day to trade at 1.3083. The pair touched a daily high at 1.3087 during early European trade, overshooting the range resistance level (R3), and a daily low at 1.3030 during the mid phase of the Asian trading session.

Meanwhile, crude oil futures marked their 67th gain out of the past 145 trading days on July 8th. Oil for August delivery went down as low as $44.77 per barrel, or its lowest level since May 11th, and closed at $45.41, edging up 0.60% compared to Thursday’s close. As of 8:18 GMT today the commodity was losing 1.56% to trade at $44.70, after going down as low as $44.55 per barrel earlier.

On Monday USD/CAD trading may be influenced by the following macroeconomic reports and other events as listed below.


United States

Feds George statement

At 14:00 GMT the Federal Reserve President for Kansas City, Esther George, is expected to take a statement. Any remarks or hints in regard to economic outlook, or the Banks monetary policy stance would heighten USD volatility.


Housing Starts

The number of housing starts in Canada probably rose to the seasonally adjusted annual level of 189 500 in June, according to the median forecast by experts, from 188 600 in May. The latter has been the lowest number of starts since January, when a revised down level of 165 100 was registered.

Housing starts are considered as a key indicator, reflecting the strength of the nation’s housing sector. In case the number of housing starts increased more than anticipated in June, this would have a moderate bullish effect on the Canadian Dollar. The official report by the Canadian Mortgage and Housing Corporation is due out at 12:15 GMT.

Correlation with other Majors

Taking into account the business week ended on July 8th 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/CHF (0.9311, or very strong)
USD/CAD to NZD/USD (0.2749, or weak)
USD/CAD to AUD/USD (-0.0291, or very weak)
USD/CAD to GBP/USD (-0.8896, or very strong)
USD/CAD to USD/JPY (-0.9386, or very strong)
USD/CAD to EUR/USD (-0.9914, or very strong)

1. During the examined period USD/CAD moved almost equally in one and the same direction with USD/CHF.

2. USD/CAD moved almost equally in the opposite direction compared to GBP/USD, USD/JPY and EUR/USD during the past week. This relationship has been the most pronounced between USD/CAD and EUR/USD, with the correlation between the two pairs being almost perfect.

3. USD/CAD moved almost independently compared to AUD/USD during the period in question.

Bond Yield Spread

The yield on Canada’s 2-year government bonds went as high as 0.490% on July 8th, after which it closed at 0.466% to remain unchanged compared to July 7th.

Meanwhile, the yield on US 2-year government bonds climbed as high as 0.657% on July 8th, or the highest level since June 24th (0.755%), after which it fell to 0.613% at the close to add 2 basis points (0.02 percentage point) compared to July 7th.

The spread between 2-year US and 2-year Canadian bond yields, which reflects the flow of funds in a short term, widened to 0.147% on July 8th from 0.127% on July 7th. The July 8th yield spread has been the highest one since June 23rd, when the difference was 0.159%.

Daily, Weekly and Monthly Pivot Levels

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

R1 – 1.3052
R2 – 1.3062
R3 (Range Resistance – Sell) – 1.3071
R4 (Long Breakout) – 1.3099
R5 (Breakout Target 1) – 1.3132
R6 (Breakout Target 2) – 1.3145

S1 – 1.3034
S2 – 1.3024
S3 (Range Support – Buy) – 1.3015
S4 (Short Breakout) – 1.2987
S5 (Breakout Target 1) – 1.2954
S6 (Breakout Target 2) – 1.2941

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

Central Pivot Point – 1.2987
R1 – 1.3147
R2 – 1.3250
R3 – 1.3410
R4 – 1.3570

S1 – 1.2884
S2 – 1.2724
S3 – 1.2621
S4 – 1.2518

In monthly terms, for USD/CAD we have the following pivots:

Central Pivot Point – 1.2907
R1 – 1.3163
R2 – 1.3401
R3 – 1.3657
R4 – 1.3913

S1 – 1.2669
S2 – 1.2413
S3 – 1.2175
S4 – 1.1937

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