Forex Market: USD/CAD trading outlook for Friday (November 11th 2016)

Yesterday’s trade (in GMT terms) saw USD/CAD within the range of 1.3377-1.3510. The pair closed at 1.3482, surging 0.76% compared to Wednesdays close. It has been the 200th gain in the past 379 trading days and also a second consecutive one. The major pair has neutralized earlier losses and is now up 0.54% so far during the current month, following a 2.14% advance in October.

At 9:05 GMT today USD/CAD was edging up 0.19% on the day to trade at 1.3508. The pair touched a daily high at 1.3515 during early Asian trade, undershooting the range resistance level (R3), and a daily low at 1.3453 during the mid phase of the Asian trading session.

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

Fundamentals

United States

Fed’s Fischer statement

At 14:00 GMT Federal Reserve Vice Chairman, Stanley Fischer, is scheduled to speak on U.S. Monetary Policy and the Global Economy at the 20th Annual Conference of the Central Bank of Chile in Santiago, Chile.

Reuters/Michigan Consumer Sentiment Index – preliminary reading

The monthly survey by Thomson Reuters and the University of Michigan may show that consumer confidence in the United States improved in November. The preliminary reading of the corresponding index, which usually comes out two weeks ahead of the final data, probably rebounded to 87.5 during the current month from a final 87.2 in October. The latter came below the preliminary reading of 87.9, which was reported on October 14th. It has been the lowest reading since September 2015, due to less optimistic prospects for the US economy, as half of all respondents expected an economic downturn within the next five years.

The sub-index of current economic conditions dropped to a final reading of 103.2 in October from a preliminary value of 105.5. In September, this barometer was reported at a final 104.2.

The sub-index of consumer expectations came in at a reading of 76.8, up from a preliminary value of 76.6 in October, but falling from a final reading of 82.7 registered in September.

Participants in the October survey expected that the rate of inflation will be at 2.4% during the next year, or unchanged from the rate projected in the preliminary release.

In case the gauge of consumer sentiment met or even exceeded expectations in November, this would have a moderate-to-strong bullish effect on the US Dollar. The preliminary reading is due out at 15:00 GMT.

Canada

BoC Poloz statement

At 15:50 GMT Bank of Canada Governor, Stephen Poloz, is scheduled to participate in a round table at the 20th Annual Conference of the Central Bank of Chile in Santiago, Chile.

Bond Yield Spread

The yield on Canada’s 2-year government bonds went up as high as 0.649% on November 10th, or the highest level since May 31st (0.663%), after which it closed at 0.628% to add 3.8 basis points (0.038 percentage point) compared to November 9th.

Meanwhile, the yield on US 2-year government bonds climbed as high as 0.927% on November 10th, or the highest level since May 31st (0.938%), after which it fell to 0.919% at the close to add 1.3 basis points (0.013 percentage point) compared to November 9th.

The spread between 2-year US and 2-year Canadian bond yields, which reflects the flow of funds in a short term, narrowed to 0.291% on November 10th from 0.316% on November 9th. The November 10th yield spread has been the lowest one since November 8th, when the difference was 0.276%.

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 – 1.3494
R2 – 1.3506
R3 (Range Resistance – Sell) – 1.3519
R4 (Long Breakout) – 1.3555
R5 (Breakout Target 1) – 1.3598
R6 (Breakout Target 2) – 1.3616

S1 – 1.3470
S2 – 1.3458
S3 (Range Support – Buy) – 1.3445
S4 (Short Breakout) – 1.3409
S5 (Breakout Target 1) – 1.3366
S6 (Breakout Target 2) – 1.3348

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