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Forex Market: USD/CAD trading outlook for Thursday (November 10th 2016)


Yesterday’s trade (in GMT terms) saw USD/CAD within the range of 1.3264-1.3527. The pair closed at 1.3379, rebounding 0.54% from Tuesdays close. It has been the 199th gain in the past 378 trading days and also the steepest one since October 21st. The daily high has been a level not seen since March 1st, when a high of 1.3553 was registered. The major pair has trimmed its drop to 0.22% so far during the current month, following a 2.14% advance in October.

At 9:05 GMT today USD/CAD was edging up 0.27% on the day to trade at 1.3415. The pair touched a daily high at 1.3426 during mid-Asian trade, undershooting the daily R2 level, and a daily low at 1.3377 during the early phase of the Asian trading session.

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


United States

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 November 4th, probably dropped to 260 000, according to market consensus, from 265 000 in the preceding week. The latter has been the highest number of claims since the business week ended on August 5th.

The 4-week moving average, an indicator lacking seasonal effects, was 257 750, marking an increase by 4 750 compared to the preceding week’s unrevised average.

The business week, which ended on October 28th, has been the 87th consecutive week, when jobless claims stood below the 300 000 threshold, which suggested a healthy labor market. It has been the longest streak since 1970.

Initial jobless claims number is a short-term indicator, reflecting lay-offs in the country. In case the number of claims met expectations or decreased further, this would have a moderate bullish effect on the US dollar.

The number of continuing jobless claims probably rose to the seasonally adjusted 2 030 000 during the business week ended on October 28th, according to the median forecast by experts, from 2 026 000 in the preceding week. The latter represented a decrease by 14 000 compared to the revised up number of claims reported in the week ended on October 14th. The figure also represented the lowest level since June 10th 2000, when 2 020 000 claims were reported. 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 13:30 GMT.

Fed’s Bullard speech

At 14:15 GMT the Fed President for St. Louis, James Bullard, is scheduled to speak at Commerce Bank in St. Louis.


New Housing Price Index

Selling prices of new homes in Canada probably rose for an 18th straight month in September, up 0.2% from a month ago, according to market expectations. In August compared to July prices went up by another 0.2%.

In August, home values rose the most in the combined region of Toronto and Oshawa (up 0.7%), followed by Kitchener–Cambridge–Waterloo (up 0.5%) and the combined region of Greater Sudbury and Thunder Bay (up 0.4%). On the other hand, selling prices were lower in Regina (down 0.5%) and Saskatoon (down 0.2%) during the same period.

The New Housing Price Index is a key indicator, reflecting the health of the Canadian housing market. Given the current state of the economy, in case prices surged more than anticipated, this would be an indication of a stronger consumer confidence and would, therefore, have a limited-to-moderate bullish effect on the local dollar. Statistics Canada will release the official report at 13:30 GMT.

Bond Yield Spread

The yield on Canada’s 2-year government bonds went up as high as 0.608% on November 9th, or the highest level since October 17th (0.626%), after which it closed at 0.590% to add 0.008 percentage point compared to November 8th.

Meanwhile, the yield on US 2-year government bonds climbed as high as 0.914% on November 9th, or the highest level since May 31st (0.938%), after which it fell to 0.894% at the close to add 3.6 basis points (0.036 percentage point) compared to November 8th.

The spread between 2-year US and 2-year Canadian bond yields, which reflects the flow of funds in a short term, widened to 0.304% on November 9th from 0.276% on November 8th. The November 9th yield spread has been the largest one since October 27th, when the difference was 0.305%.

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 – 1.3403
R2 – 1.3427
R3 (Range Resistance – Sell) – 1.3451
R4 (Long Breakout) – 1.3524
R5 (Breakout Target 1) – 1.3608
R6 (Breakout Target 2) – 1.3644

S1 – 1.3355
S2 – 1.3331
S3 (Range Support – Buy) – 1.3307
S4 (Short Breakout) – 1.3234
S5 (Breakout Target 1) – 1.3150
S6 (Breakout Target 2) – 1.3114

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

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