Yesterday’s trade (in GMT terms) saw USD/CAD within the range of 1.3109-1.3191. The pair closed at 1.3120, edging down 0.26% compared to Mondays close. It has been the 145th drop in the past 312 trading days and also a second consecutive one. The daily high has been an exact test of the high from August 8th. The major pair has trimmed its advance to 0.71% so far during the current month, following a 0.80% gain in July.
At 7:57 GMT today USD/CAD was edging down 0.32% on the day to trade at 1.3078. The pair touched a daily high at 1.3126 during early Asian trade, undershooting the daily R1 level, and a daily low at 1.3052 during the early phase of the Asian trading session as well.
Meanwhile, crude oil futures marked their 92nd drop out of the past 167 trading days on August 9th. Oil for September delivery went down as low as $42.47 per barrel and closed at $42.77, edging down 0.58% compared to Monday’s close. As of 8:12 GMT today the commodity was retreating 1.36% to trade at $42.19, after going down as low as $42.12 per barrel earlier. Crude oil prices and CAD valuation tend to be strongly positively correlated.
On Wednesday USD/CAD trading may be influenced by the following macroeconomic reports as listed below.
Fundamentals
United States
Job Openings
The number of job openings in the United States probably rose to 5.574 million in June, according to the median forecast by experts, from 5.500 million during the preceding month. In May, the number of positions waiting to be filled dropped in wholesale trade (-104 000), other services (-98 000) and real estate and rental and leasing (-53 000).
This indicator refers to all job positions that are open, but not filled on the last business day of the month. Job openings are part of the Job Openings and Labor Turnover Survey (JOLTS), which gathers data from about 16 400 non-farm establishments including retailers and manufacturers, as well as federal, state, and local government entities in the 50 states and the District of Columbia. The survey assesses the unmet demand for labor in the labor market. A higher-than-projected level of job openings will usually have a limited bullish effect on the US Dollar. The Bureau of Labor Statistics is to release the official report at 14:00 GMT.
Monthly Budget Statement
The United States probably recorded a government budget deficit of USD 113 billion in July, according to market expectations, after a budget surplus of USD 6 billion during the previous month. The latter has been an 88% decrease compared to the figure reported in June 2015.
In June total receipts fell 3.8% to USD 330 billion. individual income taxes contributed the most (USD 134 billion), followed by social security and other payroll taxes (USD 111 billion), corporate income taxes (USD 61 billion), other taxes and duties (USD 23 billion).
Total outlays increased 10.6% to USD 323 billion during June. Interest on debt contributed to USD 27 billion, Medicare – USD 46 billion, defense – USD 49 billion, social security – USD 81 billion, other outlays – USD 121 billion, according to the report by the US Treasury.
The current fiscal year-to-date budget gap amounted to USD 401 billion, or a 26.9% increase compared to the same period a year earlier.
A larger-than-projected budget deficit in July would have a moderate bearish effect on the US dollar. The Financial Management Service is to publish the official figure at 18:00 GMT.
Bond Yield Spread
The yield on Canada’s 2-year government bonds went as high as 0.515% on August 9th, after which it closed at 0.508% to lose 0.002 percentage point compared to August 8th.
Meanwhile, the yield on US 2-year government bonds climbed as high as 0.738% on August 9th, after which it fell to 0.706% at the close to lose 2 basis points (0.02 percentage point) compared to August 8th.
The spread between 2-year US and 2-year Canadian bond yields, which reflects the flow of funds in a short term, narrowed to 0.198% on August 9th from 0.216% on August 8th. The August 9th yield spread has been the lowest one since August 4th, when the difference was 0.109%.
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 – 1.3128
R2 – 1.3135
R3 (Range Resistance – Sell) – 1.3143
R4 (Long Breakout) – 1.3165
R5 (Breakout Target 1) – 1.3191
R6 (Breakout Target 2) – 1.3202
S1 – 1.3112
S2 – 1.3105
S3 (Range Support – Buy) – 1.3097
S4 (Short Breakout) – 1.3075
S5 (Breakout Target 1) – 1.3049
S6 (Breakout Target 2) – 1.3038
By using the traditional method of calculation, the weekly levels of importance for USD/CAD are presented as follows:
Central Pivot Point – 1.3123
R1 – 1.3250
R2 – 1.3329
R3 – 1.3456
R4 – 1.3583
S1 – 1.3044
S2 – 1.2917
S3 – 1.2838
S4 – 1.2759
In monthly terms, for USD/CAD we have the following pivots:
Central Pivot Point – 1.3038
R1 – 1.3244
R2 – 1.3460
R3 – 1.3666
R4 – 1.3872
S1 – 1.2822
S2 – 1.2616
S3 – 1.2400
S4 – 1.2184
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