Forex Market: USD/CAD trading outlook for Monday (November 14th 2016)

Friday’s trade (in GMT terms) saw USD/CAD within the range of 1.3453-1.3550. The pair closed at 1.3546, edging up 0.47% compared to Thursdays close. It has been the 201st gain in the past 380 trading days and also a third consecutive one. The daily high has been a level not seen since March 1st, when a high of 1.3553 was registered. In weekly terms, USD/CAD added 1.06% to its value during the past week. It has been the 19th gain in the past 45 weeks and also a fourth consecutive one. The major pair has extended its advance to 1.02% during the current month, following a 2.14% surge in October.

At 8:51 GMT today USD/CAD was edging up 0.23% on the day to trade at 1.3577. The pair touched a daily high at 1.3579 during early European trade, overshooting the range resistance level (R3), and a daily low at 1.3495 during the early phase of the Asian trading session.

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

Fundamentals

United States

Fed speakers

At 22:00 GMT the Fed President for Richmond, Jeffrey Lacker, is scheduled to speak at a media Q&A before attending a panel discussion on “Our Fiscal Health: How the National Debt Could Impact the Future for Americas Youth” at Washington College in Chestertown, Maryland.

At 23:30 GMT the Fed President for San Francisco, John Williams, is to attend a panel discussion at the Bay Area Council in San Francisco.

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

Correlation with other Majors

Taking into account the business week ended on November 11th 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 GBP/USD (0.9905, or very strong)
USD/CAD to USD/JPY (0.8200, or very strong)
USD/CAD to USD/CHF (0.7731, or strong)
USD/CAD to EUR/USD (-0.8375, or very strong)
USD/CAD to AUD/USD (-0.9759, or very strong)
USD/CAD to NZD/USD (-0.9971, or very strong)

1. During the examined period USD/CAD moved almost equally in one and the same direction with USD/JPY and GBP/USD. This relationship has been the most pronounced between USD/CAD and GBP/USD, with the correlation between the two pairs being almost perfect.

2. USD/CAD moved strongly in one and the same direction with USD/CHF during the past week.

3. USD/CAD moved almost equally in the opposite direction compared to EUR/USD, AUD/USD and NZD/USD during the period in question. This relationship has been the most pronounced between USD/CAD and NZD/USD, with the correlation between the two pairs being almost perfect.

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 – 1.3555
R2 – 1.3564
R3 (Range Resistance – Sell) – 1.3573
R4 (Long Breakout) – 1.3600
R5 (Breakout Target 1) – 1.3631
R6 (Breakout Target 2) – 1.3644

S1 – 1.3537
S2 – 1.3528
S3 (Range Support – Buy) – 1.3519
S4 (Short Breakout) – 1.3493
S5 (Breakout Target 1) – 1.3461
S6 (Breakout Target 2) – 1.3448

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

Central Pivot Point – 1.3453
R1 – 1.3643
R2 – 1.3739
R3 – 1.3929
R4 – 1.4118

S1 – 1.3357
S2 – 1.3167
S3 – 1.3071
S4 – 1.2974

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