Forex Market: USD/CAD daily trading forecast

Friday’s trade saw USD/CAD within the range of 1.1260-1.1395. The pair closed at 1.1288, losing 0.69% on a daily basis.

At 9:19 GMT today USD/CAD was up 0.17% for the day to trade at 1.1306. The pair touched a daily high at 1.1309 at 9:21 GMT.

Fundamentals

United States

New York Manufacturing

The New York Empire State Manufacturing Index probably improved to a reading of 11.00 in November, according to the median forecast by experts, from 6.17 in the prior month. The latter has been the lowest index reading since April, when the indicator was reported at 1.29. In September manufacturing activity in the region rose to the highest levels since April 2010, with the index coming in at 27.54.

The index is based on the monthly Empire State Manufacturing Survey, which is conducted by the Federal Reserve Bank of New York. About 200 top manufacturing executives respond to a questionnaire, sent out during the first day of the month. They provide their estimates in regard to the performance of several business indicators from the prior month, while also forecasting performance during the upcoming six months.

The ”general business conditions” component of the index is based on a distinct question, posed on the Empire State Manufacturing Survey, which means it is not a weighted average of the other indicators. These indicators, which are only applicable to the manufacturing facilities of survey respondents in the region of New York, include new orders, shipments, unfilled orders, delivery time, inventories, prices paid, prices received, number of employees including contract workers, average employee work week, technology spending and capital expenditures.

The general business conditions component and the sub-indexes for the 11 indicators are calculated by subtracting the percentage of respondents, rating an indicator as ”lower” (a drop), from the percentage of respondents, rating the same indicator as ”higher” (an increase). In case 33% of survey respondents stated that business conditions had improved during the current month, 50% stated that conditions had not changed, and 17% of the respondents stated that conditions had deteriorated, the index would have a reading of 16. Readings above 0.00 are indicative of improving business conditions in the region. Higher than anticipated results would certainly boost demand for the US dollar. The Federal Reserve Bank of New York is expected to release the official index reading at 13:30 GMT.

Industrial Production and Capacity Utilization Rate

Industrial output in the United States probably expanded 0.2% in October compared to September, following a 1.0% expansion in September compared to August. The latter has been the fastest monthly rate of increase since February this year, when output rose 1.2%. Manufacturing production expanded 0.5% in September with widespread gains across its components. Production of durable goods increased 0.4% in September on a monthly basis, while production of non-durable goods expanded 0.5%. Mining activity rose at a rate of 1.8% in September.

The index of industrial production reflects the change in overall inflation-adjusted value of output in sectors such as manufacturing, mining and utilities in the United States. The index is sensitive to consumer demand and interest rates. As such, industrial production is an important tool for future GDP and economic performance forecasts. Those figures are also used to measure inflation by central banks as very high levels of industrial production may lead to uncontrolled levels of consumption and rapid inflation. It is a coincident indicator, which means that changes in its levels generally echo similar shifts in overall economic activity. Any increase in the index usually boosts demand for the US dollar.

The Board of Governors of the Federal Reserve is to release the production data at 14:15 GMT.

In addition, Capacity Utilization Rate in the country probably remained unchanged at 79.3% in October. If so, this would be the highest utilization rate since March. This indicator represents the optimal rate for a stable production process, or the highest possible level of production in an enterprise, in case it operates within a realistic work schedule and has sufficient raw materials and inventories at its disposal. High rates of capacity utilization usually lead to inflationary pressure. In general, higher rates tend to be dollar positive.

Canada

Foreign portfolio investment in Canadian securities probably shrank to 7.00 billion CAD in September, according to the median forecast by experts, from 10.28 billion CAD in August. The latter has been the largest figure since May, when portfolio investment amounted to 21.42 billion CAD. This indicator reflects the flow of incoming investments in the local stock, bond and money markets. An increasing flow of foreign investments is usually related with a positive economic outlook for the country being invested in. This usually increases demand for its currency and vice versa. Therefore, in case portfolio investment in Canadian securities shrank more than anticipated, this would have a certain bearish effect on Canadas dollar. The official data by Statistics Canada is due out at 13:30 GMT.

Pivot Points

According to Binary Tribune’s daily analysis, the central pivot point for the pair is at 1.1314. In case USD/CAD manages to breach the first resistance level at 1.1369, it will probably continue up to test 1.1449. In case the second key resistance is broken, the pair will probably attempt to advance to 1.1504.

If USD/CAD manages to breach the first key support at 1.1234, it will probably continue to slide and test 1.1179. With this second key support broken, the movement to the downside will probably continue to 1.1099.

The mid-Pivot levels for today are as follows: M1 – 1.1139, M2 – 1.1207, M3 – 1.1274, M4 – 1.1342, M5 – 1.1409, M6 – 1.1477.

In weekly terms, the central pivot point is at 1.1317. The three key resistance levels are as follows: R1 – 1.1373, R2 – 1.1459, R3 – 1.1515. The three key support levels are: S1 – 1.1231, S2 – 1.1175, S3 – 1.1089.