Forex Market: USD/CAD trading outlook for Monday (November 28th 2016)

Friday’s trade (in GMT terms) saw USD/CAD within the range of 1.3454-1.3536. The pair closed at 1.3523, edging up 0.24% compared to Thursdays close. It has been the 207th gain in the past 390 trading days. The daily high has been an almost exact test of the high from November 24th. In weekly terms, USD/CAD added 0.08% to its value during the past week. It has been the 20th gain in the past 47 weeks. The major pair has extended its advance to 0.85% so far during the current month, following a 2.14% surge in October.

At 8:31 GMT today USD/CAD was edging down 0.36% on the day to trade at 1.3474. The pair touched a daily high at 1.3539 during early Asian trade, overshooting the daily R2 level, and a daily low at 1.3461 during the mid phase of the Asian trading session.

No relevant macroeconomic reports and other events, which may influence USD/CAD trading, are scheduled on Monday.

Correlation with other Majors

Taking into account the business week ended on November 25th 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 USD/JPY (0.8597, or very strong)
USD/CAD to AUD/USD (0.8254, or very strong)
USD/CAD to USD/CHF (0.8038, or very strong)
USD/CAD to GBP/USD (-0.3382, or moderate)
USD/CAD to NZD/USD (-0.5552, or strong)
USD/CAD to EUR/USD (-0.6706, or strong)

1. During the examined period USD/CAD moved almost equally in one and the same direction with USD/CHF, AUD/USD and USD/JPY. This relationship has been the most pronounced between USD/CAD and USD/JPY.

2. USD/CAD moved strongly in the opposite direction compared to NZD/USD and EUR/USD during the past week.

Bond Yield Spread

The yield on Canada’s 2-year government bonds went up as high as 0.705% on November 25th, or the highest level since April 26th (0.705%), after which it closed at 0.670% to add 0.006 percentage point compared to November 23rd.

Meanwhile, the yield on US 2-year government bonds climbed as high as 1.170% on November 25th, or the highest level in more than 2 years, after which it fell to 1.127% at the close to lose 0.004 percentage point compared to November 23rd.

The spread between 2-year US and 2-year Canadian bond yields, which reflects the flow of funds in a short term, narrowed to 0.457% on November 25th from 0.467% on November 23rd. The November 25th yield spread has been the lowest one since November 22nd, when the difference was 0.439%.

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 – 1.3531
R2 – 1.3538
R3 (Range Resistance – Sell) – 1.3546
R4 (Long Breakout) – 1.3568
R5 (Breakout Target 1) – 1.3594
R6 (Breakout Target 2) – 1.3605

S1 – 1.3515
S2 – 1.3508
S3 (Range Support – Buy) – 1.3500
S4 (Short Breakout) – 1.3478
S5 (Breakout Target 1) – 1.3452
S6 (Breakout Target 2) – 1.3441

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

Central Pivot Point – 1.3479
R1 – 1.3581
R2 – 1.3638
R3 – 1.3740
R4 – 1.3841

S1 – 1.3422
S2 – 1.3320
S3 – 1.3263
S4 – 1.3205

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