Forex Market: USD/CAD daily trading forecast

Friday’s trade saw USD/CAD within the range of 1.1548-1.1673. The pair closed at 1.1670, gaining 0.71% on a daily basis.

At 8:43 GMT today USD/CAD was down 0.18% for the day to trade at 1.1647. The pair touched a daily low at 1.1633.

Fundamentals

United States

Housing Starts and Building Permits

The number of housing starts in the United States probably increased to 1.025 million in November from the seasonally adjusted annual rate of 1.009 million during the prior month. Octobers figure has been influenced by a 15.5% drop in houses with 5 units or more. Single-family housing starts in October were at a rate of 696 000, or 4.2% above the revised figure of 668 000 in September. The October rate for units in buildings with five units or more was 300 000, according to data by the US Census Bureau.

Housing Starts represent a gauge to measure residential units, on which construction has already begun, every month. A start in construction is defined as the foundation laying of a building and it encompasses residential housing primarily.

The number of building permits in the country probably dropped to 1.047 million in November from an unrevised annual level of 1.080 million in October. The latter has been the highest number of permits in six and a half years. Single-family authorizations in October were at a rate of 640 000, or 1.4% above the revised number of 631 000 in September. Authorizations of units in buildings with five units or more were at a rate of 406 000 in October, according to the report by the Census Bureau.

Building permits are permits, issued in order to allow excavation. An increase in the number of building permits and housing starts usually occurs a few months after mortgage rates in the country have been reduced. Permits are not required in all regions of the United States. Building permits, as an indicator, provide information regarding demand in US housing market. In case a higher-than-anticipated number is reported, this will certainly support the greenback. The official housing data is due out at 13:30 GMT.

Manufacturing data by Markit – preliminary release

Manufacturing activity in the United States probably accelerated in December, with the corresponding preliminary Purchasing Managers Index coming in at a reading of 55.2. In November the final seasonally adjusted PMI stood at 54.8, which has been the lowest reading since January, when the indicator was reported at 53.7. Factory activity slowed for the third consecutive month to the lowest figure in ten months, as new orders and output sub-indexes declined.

According to Markits statement: “Volumes of new work received by U.S. manufacturers continued to increase at a solid pace during November, but the latest rise was the weakest since the start of the year. Anecdotal evidence suggested a greater degree of caution among clients and weaker sales to export markets. Although only modest, the latest data indicated that new business from abroad decreased at the fastest pace since June 2013.”

“The latest survey indicated that backlogs of work were broadly unchanged across the U.S. manufacturing sector, which ended a nine-month period of expansion. Despite reduced pressure on operating capacity, manufacturing job creation remained relatively strong in November. Moreover, the rate of employment growth accelerated since the previous month and was the second-fastest since January 2013.”

Values above the key level of 50.0 indicate optimism (expanding activity). Higher-than-expected PMI readings would certainly support the US dollar. The preliminary data by Markit Economics is due out at 14:45 GMT.

Canada

Manufacturing Sales

Manufacturing sales in Canada probably dropped 0.4% in October compared to September, according to market expectations, following a 2.1% increase in September compared to August. The Monthly Survey of Manufacturing features statistical data regarding sales of finished goods, inventories, unfilled orders and new orders in Canadian sector of manufacturing. About 10 500 items and 27 000 companies are encompassed.

Manufacturing sales are considered as an indicator of demand in the future. An increase in the number of goods and unsold inventories suggests, that demand is not sufficient and vice versa. On the other hand, an increase in sales (shipments) speaks of strong demand. Therefore, in case shipments decreased at a faster than projected pace, this might have a bearish impact on Canadas dollar. Statistics Canada will release the manufacturing data at 13:30 GMT.

Pivot Points

According to Binary Tribune’s daily analysis, the central pivot point for the pair is at 1.1630. In case USD/CAD manages to breach the first resistance level at 1.1713, it will probably continue up to test 1.1755. In case the second key resistance is broken, the pair will probably attempt to advance to 1.1838.

If USD/CAD manages to breach the first key support at 1.1588, it will probably continue to slide and test 1.1505. With this second key support broken, the movement to the downside will probably continue to 1.1463.

The mid-Pivot levels for today are as follows: M1 – 1.1484, M2 – 1.1547, M3 – 1.1609, M4 – 1.1672, M5 – 1.1734, M6 – 1.1797.

In weekly terms, the central pivot point is at 1.1519. The three key resistance levels are as follows: R1 – 1.1640, R2 – 1.1713, R3 – 1.1834. The three key support levels are: S1 – 1.1446, S2 – 1.1325, S3 – 1.1252.