Forex Market: USD/CAD daily trading forecast

Written by Miroslav Marinov

Miroslav Marinov, a financial news editor at TradingPedia, is engaged with observing and reporting on the tendencies in the Foreign Exchange Market, as currently his focus is set on the major currencies of eight developed nations worldwide.

, | Updated: October 30, 2024

Yesterday’s trade saw USD/CAD within the range of 1.2617-1.2769. The pair closed at 1.2686, losing 0.52% on a daily basis.

At 9:17 GMT today USD/CAD was up 0.28% for the day to trade at 1.2721. The pair broke the first key weekly resistance level and touched a daily high at 1.2731 at 6:35 GMT.

Fundamentals

United States

Producer Prices

United States’ annualized producer price inflation probably remained at 0% for a second consecutive month in February, according to the median estimate by experts. If so, this would be the lowest producer inflation since October 2009, when the corresponding index (PPI) fell at an annualized pace of 1.9%. This index reflects the change in prices of over 8 000 products, sold by manufacturers during the respective period. The Producer Price Index (PPI) differs from the Consumer Price Index (CPI), which measures the change in prices from consumer’s perspective, due to subsidies, taxes and distribution costs of different types of manufacturers in the country. The simple logic behind this indicator is that if producers are forced to pay more for goods and services, they are more likely to pass these higher costs to the end consumer. Therefore, the PPI is considered as a leading indicator of consumer inflation. Lower-than-expected annual producer prices would usually have a bearish effect on the greenback.

The nation’s annualized core producer price inflation, which excludes prices of volatile categories such as food and energy, probably remained steady at 1.6% in February. The latter has been the lowest annual rate of increase in the index since September 2014, when the corresponding annualized PPI climbed 1.6%. This indicator is quite sensitive to changes in aggregate demand, thus, it can be used as a leading indicator for economy. However, because of its restrained scope, it is not suitable for future inflation forecasts. The Bureau of Labor Statistics is expected to report the official PPI performance at 12:30 GMT.

Canada

Change in Employment, Unemployment Rate

The number of the employed people in Canada probably decreased by 5 000 in February, according to market expectations. In January the number of the employed rose by 35 400, or the most since October 2014, when a number of 43 100 was reported. Part-time employment rose by 47 000 in January compared to December, while full-time employment was little changed during the period. There was little employment change in January for men and women aged between 25 and 54, while their unemployment rates remained at 5.6% and 5.3%, respectively. Employment among men and women aged between 15 and 24 was unchanged in January, while their unemployment rate went down 0.7 percentage points to 12.8%, with fewer youths searching for a job, according to the report by the Statistics Canada. Creation of new job positions is considered of utmost importance for consumer spending. In case employment in the country decreased at a faster pace than expected, this would have a bearish effect on the Canadian dollar.

Meanwhile, the rate of unemployment in the country probably rose to 6.7% in February from 6.6% in January. A higher-than-expected rate of increase would have a bearish effect on the local currency. Statistics Canada is expected to release its official employment report at 12:30 GMT.

Pivot Points

According to Binary Tribune’s daily analysis, the central pivot point for the pair is at 1.2691. In case USD/CAD manages to breach the first resistance level at 1.2764, it will probably continue up to test 1.2843. In case the second key resistance is broken, the pair will probably attempt to advance to 1.2916.

If USD/CAD manages to breach the first key support at 1.2612, it will probably continue to slide and test 1.2539. With this second key support broken, the movement to the downside will probably continue to 1.2460.

The mid-Pivot levels for today are as follows: M1 – 1.2500, M2 – 1.2576, M3 – 1.2652, M4 – 1.2728, M5 – 1.2804, M6 – 1.2880.

In weekly terms, the central pivot point is at 1.2552. The three key resistance levels are as follows: R1 – 1.2699, R2 – 1.2777, R3 – 1.2924. The three key support levels are: S1 – 1.2474, S2 – 1.2327, S3 – 1.2249.