Forex Market: USD/CAD daily trading forecast

Yesterday’s trade saw USD/CAD within the range of 1.0864-1.0935. The pair closed at 1.0930, gaining 0.53% on a daily basis.

At 8:57 GMT today USD/CAD was down 0.13% for the day to trade at 1.0914. The pair touched a daily low at 1.0903 at 8:45 GMT.

Fundamental view

United States

Factory orders in the United States probably increased 11.0% in July compared to a month ago, following an increase by 1.1% in June. This indicator presents the total value of new purchase orders, placed at manufacturers for durable and non-durable goods, and can provide insight into inflation and growth in US manufacturing sector. In case orders increased more than anticipated, this would have a bullish effect on the greenback. US Census Bureau will release the official data at 14:00 GMT.

At 18:00 GMT the Federal Reserve is to release its “Beige Book” report. It is published eight times during the year. Each of the banks in the 12 Federal Reserve Districts gathers data in regard to current economic situation in the country on the basis of interviews with key business contacts, economists, market experts, and other sources. In case the Beige Book presents an optimistic economic outlook, this will usually support the greenback, while a pessimistic view will have a bearish effect on the currency.

Canada

Bank of Canadas (BoC) Governing Council probably left the target for the benchmark interest rate (overnight rate) without change at 1.0% at its policy meeting today, according to expectations. At its meeting on July 16th the central bank left the Bank Rate at 1.25% and the deposit rate at 0.75%.

According to BoC Statement, general CPI has moved up to around the 2% objective during recent months, sooner than expected, while core consumer inflation has also increased, but remains below 2%. Recent higher inflation comes as a result of the temporary effects of higher energy prices, exchange rate pass-through and other sector-specific shocks rather than to any change in domestic economic fundamentals. The global economy is on a lower growth track than was foreseen at the time of the Monetary Policy Report in April. In order to accomplish the inflation objective on a sustained basis in 2016, the economy must reach and remain at full capacity. Canadian economy is expected to reach full capacity in mid-2016, a little later than projected in April.

Short-term interest rates are of utmost importance for the valuation of national currencies. In case Bank of Canada is hawkish about inflationary pressure in the economy and, thus, decides to introduce a rate hike, this will provide support to the loonie. Respectively, a decision (maintaining or cutting the benchmark rate), a result of a more dovish view, will have a bearish effect on the national currency.

The official policy decision is scheduled to be announced at 14:00 GMT.

Technical view

According to Binary Tribune’s daily analysis, the central pivot point for the pair is at 1.0910. In case USD/CAD manages to breach the first resistance level at 1.0955, it will probably continue up to test 1.0981. In case the second key resistance is broken, the pair will probably attempt to advance to 1.1026.

If USD/CAD manages to breach the first key support at 1.0884, it will probably continue to slide and test 1.0839. With this second key support broken, the movement to the downside will probably continue to 1.0813.

The mid-Pivot levels for today are as follows: M1 – 1.0826, M2 – 1.0862, M3 – 1.0897, M4 – 1.0933, M5 – 1.0968, M6 – 1.1004.

In weekly terms, the central pivot point is at 1.0894. The three key resistance levels are as follows: R1 – 1.0981, R2 – 1.1084, R3 – 1.1171. The three key support levels are: S1 – 1.0791, S2 – 1.0704, S3 – 1.0601.