Forex Market: USD/CAD daily trading forecast

Yesterday’s trade saw USD/CAD within the range of 1.2386-1.2591. The pair closed at 1.2574, gaining 1.28% on a daily basis.

At 10:01 GMT today USD/CAD was down 0.48% for the day to trade at 1.2512. The pair touched a daily low at 1.2511 at 9:58 GMT.

Fundamentals

United States

Initial, 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 January 30th, probably increased to 290 000 from 265 000 in the prior week. The latter has been the lowest number of claims since April 15th 2000, when it was reported at 259 000. The 4-week moving average, an indicator lacking seasonal effects, was 298 500, marking a decrease of 8 250 from the previous weeks revised average. The prior weeks average was revised up by 250 to 306 750.

Initial jobless claims number is a short-term indicator, reflecting lay-offs in the country. In case the number of claims fell more than projected, this would have a bullish effect on the greenback.

The number of continuing jobless claims probably increased to the seasonally adjusted 2 395 000 during the week ended on January 23rd from 2 385 000 in the previous week. The latter was a decrease by 71 000 compared to the revised up number of claims, reported during the week ended on January 9th. This indicator represents the actual number of people unemployed and currently receiving unemployment benefits, who filed for unemployment assistance at least two weeks ago.

The Department of Labor is to release the weekly report at 13:30 GMT.

Balance of trade

The deficit on US balance of trade probably narrowed to USD 38.0 billion during December from a trade gap of USD 39.0 billion, registered in November. If so, this would be the smallest shortfall since November 2013, when a deficit of USD 34.56 billion was reported. In November total exports declined 1% to reach USD 196.4 billion. Exports of goods were down by USD 1.8 billion to USD 136.7 billion in November, due to a drop in shipments of civilian aircraft and generators (USD 1.1 billion) and shipments of generators, transformers, and accessories (down by USD 0.3 billion). Exports of services decreased by USD 0.1 billion. At the same time, total imports fell 2.2% to reach USD 235.4 billion in November. Imports of goods went down by USD 5.2 billion to USD 195 billion, as imports of crude oil and fuel oil declined by USD 2.2 billion and USD 0.7 billion respectively. Imports of services were down less than USD 0.1 billion during the period.

The trade balance, as an indicator, measures the difference in value between the 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 the Gross Domestic Product. Generally, exports are linked to economic growth, while imports indicate how strong domestic demand is. In case the trade balance deficit narrowed more than anticipated, this would boost demand for the greenback. The Bureau of Economic Analysis will release the official trade data at 13:30 GMT.

Canada

Balance of trade

The deficit on Canadian balance of trade probably widened to CAD 1.200 billion during December, according to the median estimate by experts, from a deficit of CAD 0.644 billion in November. If so, this would be the largest trade gap since November 2013, when a deficit of CAD 1.53 billion was reported. In November total exports fell 3.5% to reach CAD 43.3 billion, or the lowest value since April 2014. Shipments of energy products were 7.8% lower to reach CAD 9.5 billion in November, which has been the sixth consecutive monthly drop. At the same time, total imports decreased 2.7% to CAD 43.91 billion, which has been the lowest figure since July 2014. Imports of aircraft and other transportation equipment and parts were down 18.7% to CAD 1.4 billion in November, while imports of motor vehicles and parts grew at a rate of 1.2%, according to the report by the Statistics Canada.

In case the trade balance deficit grew more than expected, this would have a bearish effect on the Canadian dollar. Statistics Canada will release the official trade data at 13:30 GMT.

Pivot Points

According to Binary Tribune’s daily analysis, the central pivot point for the pair is at 1.2517. In case USD/CAD manages to breach the first resistance level at 1.2648, it will probably continue up to test 1.2722. In case the second key resistance is broken, the pair will probably attempt to advance to 1.2853.

If USD/CAD manages to breach the first key support at 1.2443, it will probably continue to slide and test 1.2312. With this second key support broken, the movement to the downside will probably continue to 1.2238.

The mid-Pivot levels for today are as follows: M1 – 1.2275, M2 – 1.2378, M3 – 1.2480, M4 – 1.2583, M5 – 1.2685, M6 – 1.2788.

In weekly terms, the central pivot point is at 1.2635. The three key resistance levels are as follows: R1 – 1.2895, R2 – 1.3057, R3 – 1.3317. The three key support levels are: S1 – 1.2473, S2 – 1.2213, S3 – 1.2051.