Forex Market: USD/CAD trading outlook for Wednesday (November 9th 2016)

Yesterday’s trade (in GMT terms) saw USD/CAD within the range of 1.3298-1.3410. The pair closed at 1.3307, retreating 0.49% from Mondays close. It has been the 179th drop in the past 377 trading days, a second consecutive one and also the steepest one since October 13th. The daily low has been a level not seen since October 25th, when a low of 1.3278 was registered. The major pair has extended its drop to 0.76% so far during the current month, following a 2.14% advance in October.

At 8:29 GMT today USD/CAD was advancing 0.83% on the day to trade at 1.3417. The pair touched a daily high at 1.3527 during late Asian trade and a daily low at 1.3264 during the early phase of the Asian trading session.

Risk aversion dominated market sentiment on Wednesday, pressuring crude oil, Canadian, Australian, New Zealand Dollars as well as Mexicos Peso, as Republican Donald Trump has been elected the 45th President of the United States, an outcome which confounded investor expectations.

“We will double our growth and have the strongest economy in the world. At the same time, we will get along with all other nations willing to get along with us”, Trump said in his victory speech, cited by Reuters.

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

Fundamentals

United States

Wholesale Inventories

The value of goods inventories, held at US wholesalers, probably rose at a monthly rate of 0.2% in September, according to market expectations. In August, inventories dropped for the first time since February, at a rate of 0.2%. In case wholesale inventories grew at a faster rate than projected in September, this would have a limited-to-moderate bearish effect on the US Dollar. The Census Bureau is to release the official report at 15:00 GMT.

Fed speakers

At 18:30 GMT the Fed President for Minneapolis, Neel Kashkari, is to take part in a fireside chat in Eau Claire, Wisconsin.

At 2:00 GMT on Thursday the Fed President for San Francisco, John Williams, is scheduled to take part in a fireside chat on Outlook on the Economy at the University of San Francisco.

Economic outlook or monetary policy-related remarks would heighten USD volatility.

Bond Yield Spread

The yield on Canada’s 2-year government bonds went up as high as 0.584% on November 8th, or the highest level since October 28th (0.591%), after which it closed at 0.582% to add 2.9 basis points (0.029 percentage point) compared to November 7th.

Meanwhile, the yield on US 2-year government bonds climbed as high as 0.874% on November 8th, or the highest level since October 28th (0.900%), after which it fell to 0.866% at the close to add 4.8 basis points (0.048 percentage point) compared to November 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 0.284% on November 8th from 0.265% on November 7th. The November 8th yield spread has been the largest one since November 1st, when the difference was 0.284%.

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 – 1.3317
R2 – 1.3328
R3 (Range Resistance – Sell) – 1.3338
R4 (Long Breakout) – 1.3369
R5 (Breakout Target 1) – 1.3405
R6 (Breakout Target 2) – 1.3419

S1 – 1.3297
S2 – 1.3286
S3 (Range Support – Buy) – 1.3276
S4 (Short Breakout) – 1.3245
S5 (Breakout Target 1) – 1.3209
S6 (Breakout Target 2) – 1.3195

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

Central Pivot Point – 1.3408
R1 – 1.3463
R2 – 1.3522
R3 – 1.3577
R4 – 1.3632

S1 – 1.3349
S2 – 1.3294
S3 – 1.3235
S4 – 1.3176

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

Central Pivot Point – 1.3283
R1 – 1.3560
R2 – 1.3711
R3 – 1.3988
R4 – 1.4265

S1 – 1.3132
S2 – 1.2855
S3 – 1.2704
S4 – 1.2553