USDCAD TECHS: Bull Channel Base Pierced

• RES 4: 1.4200 Round number resistance  
• RES 3: 1.4167 50.0% retracement of the Feb 3 - Jun 16 bear leg
• RES 2: 1.4111 High Apr 10
• RES 1: 1.4096 High Nov 4
• PRICE: 1.4088 @ 16:19 GMT Nov 4
• SUP 1: 1.3987 20-day EMA 
• SUP 2: 1.3928 50-day EMA 
• SUP 3: 1.3888 Low Oct 29 and a key support  
• SUP 4: 1.3855 Bull channel base drawn from the Jul 23 low

A strong rally in USDCAD last week, and this week’s extension, highlights a clear reversal of the corrective bear leg between Oct 14 - 29. The pair has breached 1.4080, the Oct 16 high to confirm a resumption of the uptrend. Note too that moving average studies are in a bull-mode position, highlighting a dominant bull cycle. Sights are on 1.4111 next, the Apr 10 high. First support lies at 1.3987, the 20-day EMA.    

From our Refunding preview/latest Treasury Issuance Deep Dive: 

• October‘s coupon auctions were mixed, with four tails, two trade-throughs and one sale coming out on-the-screws. Underperformance was seen in the belly of the curve, with the 7- and 10-year sales tailing. Meanwhile, the two solid trade-throughs were seen in the 3- and 20-year tenors.
• The strongest sale of the month, according to MNI’s Relative Strength Indicator (RSI) was the 3-year. The 1.82 RSI outturn matched February’s results, supported by a 0.8bp trade-through (vs 0.7bp in September, 1.2bp in February) and a 10.7% primary dealer take-up (vs 8.4% in September, 17.9% in August).
• Although the 5-year sale came out on-the-screws, it still corresponded to a 1.25 RSI because of the four consecutive tails seen between June and September.
• The 10-year auction was the weakest of the month with a -0.91 RSI. However, the 0.5bp tail was still smaller than the 1.0bp tail seen in August. 

Results: 

• 2Y Note tail: 3.504% vs. 3.503% WI.
• 2Y FRN: 0.190% high margin vs. 0.200% prior
• 3Y Note trade-through: 3.576% vs. 3.584% WI.
• 5Y Note on-the-screws: 3.625% vs 3.625% WI.
• 5Y TIPS: 1.182% high yield vs. 1.650% prior
• 7Y Note tail: 3.790% vs. 3.782% WI.
• 10Y Note tail: 4.117% vs. 4.112% WI.
• 20Y Bond trade-through: 4.506% vs 4.517% WI.
• 30Y Bond tail: 4.734% vs. 4.729% WI.

Source: Bloomberg Finance L.P./MNI