Forex Market: USD/CAD trading outlook for Friday (December 2nd 2016)

Yesterday’s trade (in GMT terms) saw USD/CAD within the range of 1.3301-1.3441. The pair closed at 1.3318, shedding 0.83% from Wednesdays close. It has been the 186th drop in the past 394 trading days, a second consecutive one and also the steepest one since November 28th. The daily low has been a level not seen since November 9th, when a low of 1.3264 was registered. The major pair has lost 0.83% of its value so far in December, following a 0.15% gain in November.

At 9:59 GMT today USD/CAD was edging down 0.15% on the day to trade at 1.3298. The pair touched a daily high at 1.3323 during early Asian trade, undershooting the daily R1 level, and a daily low at 1.3286 during the early phase of the Asian trading session as well.

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

Fundamentals

United States

Non-farm Payrolls, Unemployment Rate, Average Hourly Earnings

Employers in all sectors of economy in the United States, excluding the farming industry, probably added 175 000 new jobs in November, according to the median forecast by experts, after a job gain of 161 000 in October. September’s figure has been revised up to 191 000 from 156 000 reported previously.

Total non-farm payrolls account for 80% of the workers, who produce the entire Gross Domestic Product of the United States. In case of a higher-than-expected gain in jobs in November, demand for the US dollar would be strongly supported.

Average Hourly Earnings probably increased 0.2% in November compared to the prior month, according to market expectations, following a 0.4% gain in October. If expectations were met, November would be the ninth consecutive month of earnings increase.

Meanwhile, the rate of unemployment in the country probably remained steady at 4.9% in November, according to market expectations. In September, a rate of 5.0% was reported.

In case the unemployment rate met expectations or even fell further, this would have a strong bullish effect on the US Dollar, because of positive implications for consumer spending. The Bureau of Labor Statistics will release the official employment data at 13:30 GMT.

Fed speakers

At 13:45 GMT Federal Reserve Governor, Lael Brainard, is to deliver welcoming remarks at the “Financial Innovation: Online Lending to Households and Small Businesses” conference at the Federal Reserve Board in Washington, D.C.

At 18:00 GMT Federal Reserve Governor, Daniel Tarullo, is to attend the Office of Financial Researchs Financial Stability Conference in Washington, D.C.

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

Canada

Employment Change, Unemployment Rate

The number of the employed people in Canada probably fell by 20 000 in November, according to market expectations, following an unexpected increase by 43 900 in October. The latter has been a third consecutive month of employment growth.

Meanwhile, the rate of unemployment in the country probably remained at 7.0% for a fourth straight month in November, according to the median forecast by analysts.

A higher-than-expected rate of increase in employment and a stable or even lower unemployment rate would have a strong bullish effect on the local currency, due to positive implications in regard to consumer spending. Statistics Canada is expected to release the official employment report at 13:30 GMT.

Bond Yield Spread

The yield on Canada’s 2-year government bonds went up as high as 0.778% on December 1st, after which it closed at 0.757% to add 5.4 basis points (0.054 percentage point) compared to November 30th.

Meanwhile, the yield on US 2-year government bonds climbed as high as 1.167% on December 1st, after which it fell to 1.143% at the close to add 2.4 basis points (0.024 percentage point) compared to November 30th.

The spread between 2-year US and 2-year Canadian bond yields, which reflects the flow of funds in a short term, narrowed to 0.386% on December 1st from 0.416% on November 30th. The December 1st yield spread has been the lowest one since November 17th, when the difference was 0.366%.

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 – 1.3331
R2 – 1.3344
R3 (Range Resistance – Sell) – 1.3357
R4 (Long Breakout) – 1.3395
R5 (Breakout Target 1) – 1.3440
R6 (Breakout Target 2) – 1.3458

S1 – 1.3305
S2 – 1.3292
S3 (Range Support – Buy) – 1.3280
S4 (Short Breakout) – 1.3241
S5 (Breakout Target 1) – 1.3196
S6 (Breakout Target 2) – 1.3178

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 – 1.3428
R1 – 1.3591
R2 – 1.3754
R3 – 1.3917
R4 – 1.4081

S1 – 1.3265
S2 – 1.3102
S3 – 1.2939
S4 – 1.2777