Forex Market: USD/CAD daily trading forecast

Yesterday’s trade saw USD/CAD within the range of 1.0866-1.0941. The pair closed at 1.0889, losing 0.38% on a daily basis.

At 8:12 GMT today USD/CAD was up 0.13% for the day to trade at 1.0902. The pair touched a daily high at 1.0910 at 7:15 GMT.

Fundamental view

United States

ADP Employment Report

Employers in the US non-farm private sector probably added 220 000 new jobs during August, according to the median estimate by experts, following 218 000 new positions added in July. The employment report by Automated Data Processing Inc. (ADP) is based on data that encompasses 400 000 – 500 000 companies employing over 24 million people, working in the 19 major sectors of the economy. The ADP employment change indicator is calculated in accordance with the same methodology, which the Bureau of Labor Statistics (BLS) uses. Published two days ahead of governments employment statistics, this report is used by traders as a reliable predictor of the official non-farm payrolls data. Creation of jobs is considered of utmost importance for consumer spending, while the latter is a major driving force behind economic growth. In case market expectations were exceeded, this would bolster demand for the US dollar. The official figure is scheduled to be published at 12:15 GMT.

Initial and Continuing Jobless Claims

The number of people in the United States, who filed for unemployment assistance for the first time during the week ended on August 29th, probably increased to 300 000 from 298 000 in the prior week.

The four-week moving average, an indicator considered as lacking seasonal effects, dropped to 299 750 in the week ended on August 22nd, or a decrease by 1 250 compared to the preceding week.

The number of initial jobless claims has been close to the lowest levels since 2007, as US labor market continued improving. This is a short-term indicator, reflecting lay-offs in the country. In case the number of initial jobless claims increased more than projected, this would have a bearish effect on the greenback. The Department of Labor is to release the weekly report at 12:30 GMT.

The number of continuing jobless claims probably decreased to the seasonally adjusted 2 510 000 during the week ended on August 22nd, from 2 527 000 in the previous week. This indicator represents the actual number of people unemployed and currently receiving unemployment benefits, who filed for unemployment assistance at least two weeks ago.

Balance of Trade

The deficit on US trade balance probably widened to 42.500 billion USD during July from a deficit of 41.538 billion USD, registered in June, which has been the smallest gap since January. In June total exports were at the amount of 195.9 billion USD, while imports amounted to 237.4 billion USD.

The trade balance, as an indicator, measures the difference in value between country’s exported and imported goods and services during the reported period. It reflects the net export of goods and services, or one of the components to form country’s Gross Domestic Product. Generally, exports reflect economic growth, while imports indicate domestic demand. In case the trade balance deficit widened more than anticipated, this would have a bearish effect on the US dollar. The Bureau of Economic Analysis will release the official numbers at 12:30 GMT.

ISM Non-Manufacturing Index

Activity in United States’ sector of services probably slowed down in August, with the corresponding non-manufacturing PMI coming in at a reading of 57.6, according to expectations, from 58.7 in July. This is a compound index, based on the values of four equally-weighted components, that comprise it. These sub-indexes reflect seasonally adjusted new orders, seasonally adjusted employment, seasonally adjusted business activity and supplier deliveries.

The business report is based on data compiled from monthly replies to questions asked of over 370 purchasing and supply executives operating in over 62 different industries, which represent nine divisions from the Standard Industrial Classification (SIC) categories.

Participants can either respond with “better”, “same”, or “worse” to the questions about the industry, in which they operate. The resulting PMI value is measured from 0 to 100. If the index shows a value of 100.0, this means that 100% of the respondents reported an improvement in conditions. If the index shows a value of 0, this means that 100% or the respondents reported a deterioration in conditions. If 100% of the respondents saw no change in conditions, the index will show a reading of 50.0. Therefore, readings above the key level of 50.0 are indicative of expanding activity. In case market expectations were exceeded, the US dollar would receive a boost. The Institute for Supply Management (ISM) is to release the official PMI reading at 14:00 GMT.

Canada

The surplus on Canadian trade balance probably contracted to 0.900 billion CAD during July from 1.860 billion CAD in the prior month, which has been the largest surplus since December 2011. In June total exports increased 1.1% to the record high 45.2 billion CAD due to sales of metal and non-metallic mineral products, consumer goods, and energy products. Total imports dropped to 43.3 billion CAD.

The trade balance, as an indicator, measures the difference in value between nation’s exported and imported goods and services during the reported period. It reflects the net export of goods and services, or one of the components to form country’s Gross Domestic Product. In case the trade balance surplus shrank more than expected, this would have a bearish effect on the Canadian dollar. Statistics Canada will release the official trade data at 12:30 GMT.

Yesterday the loonie found certain support, after Bank of Canada left monetary policy unchanged in line with expectations.

Technical view

According to Binary Tribune’s daily analysis, the central pivot point for the pair is at 1.0899. In case USD/CAD manages to breach the first resistance level at 1.0931, it will probably continue up to test 1.0974. In case the second key resistance is broken, the pair will probably attempt to advance to 1.1006.

If USD/CAD manages to breach the first key support at 1.0856, it will probably continue to slide and test 1.0824. With this second key support broken, the movement to the downside will probably continue to 1.0781.

The mid-Pivot levels for today are as follows: M1 – 1.0803, M2 – 1.0840, M3 – 1.0878, M4 – 1.0915, M5 – 1.0953, M6 – 1.0990.

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.