Yesterday’s trade saw USD/CAD within the range of 1.2074 – 1.1942, the lowest in more than three months. The pair closed 0.11% lower at 1.2021, falling for a third straight session.
At 6:48 GMT today USD/CAD was up 0.12% for the day to trade at 1.2035. The cross held in a daily range of 1.2004 – 1.2038.
Fundamentals
United States
Employment Cost Index (ECI) in the United States probably rose 0.6% during the first quarter from the previous three months, following another 0.6% gain in Q4 compared to Q3.
This index measures the change in the price of labor, defined as compensation per employee hour worked. It shows changes in the cost of compensation not only for wages and salaries, but also for an extensive list of benefits. The ECI is considered as an indicator reflecting cost pressures within companies that could trigger price inflation for finished goods and services. A larger-than-expected rate of increase would generally provide a certain support to the US dollar. The Bureau of Labor Statistics is to release the quarterly data at 12:30 GMT.
Meanwhile, personal spending in the United States probably rose 0.5% in March on a monthly basis, while personal income was probably up for a 15th consecutive month in last month, increasing 0.2%. Spending rose 0.1% in February, while personal income jumped 0.4% during the same month. Higher-than-expected rates of increase imply good employment conditions and, therefore, are dollar positive.
The Core Personal Consumption Expenditure Index, a gauge measuring the price of goods and services purchased by consumers for the purpose of consumption, likely rose 0.2% in March, following two months of 0.1% growth. This measure excludes the more volatile food and energy items. The Bureau of Economic Analysis is to publish the official figures at 12:30 GMT.
Jobless claims
A separate report by the Labor Department is expected to show that the number of people in the United States who filed for unemployment assistance for the first time during the week ended April 25th probably fell to 290 000 from 295 000 in the previous seven days. The 4-week moving average, an indicator used to iron out week-to-week volatility, was at 284 500 last week, above the previous periods upward-revised average.
Initial jobless claims number is a short-term indicator, reflecting lay-offs in the country. In case the number of claims dropped more than projected, this would have a bullish effect on the greenback.
The number of continuing jobless claims probably slid to 2 300 000 during the week ended April 18th from 2 325 000 during the previous period. This indicator reflects 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 12:30 GMT.
Canada
Canadian Gross Domestic Product (GDP) probably contracted by 0.1% on a monthly basis in February, according to the median forecast by experts, following another drop of 0.1% the previous month.
The GDP represents the total monetary value of all goods and services produced by one nation over a specific period of time. What is more, it is the broadest indicator of a country’s economic activity. The report on GDP is closely monitored by market participants as they will usually look for higher rates of growth as a sign that interest rates will follow the same direction. Higher interest rates will attract more investors, willing to purchase assets in the country, which in turn will increase demand for the national currency. If an economy is experiencing a robust rate of growth, the benefits will eventually affect the end consumer, because of the increased likelihood of spending, while through increased consumer expenditures the economy has the potential to expand even further. Therefore, in case Canada’s growth outpaced expectations, this would heighten the appeal of the Canadian dollar. Statistics Canada is expected to release the official figure at 12:30 GMT.
Pivot points
According to Binary Tribune’s daily analysis, the pair’s central pivot point stands at 1.2012. In case it penetrates the first resistance level at 1.2083, it will encounter next resistance at 1.2144. If breached, upside movement may attempt to advance to 1.2215.
If the cross drops below its S1 level at 1.1951, it will next see support at 1.1880. If the second key support zone is breached, downward movement may extend to 1.1819.
In weekly terms, the central pivot point is at 1.2195. The three key resistance levels are as follows: R1 – 1.2292, R2 – 1.2403, R3 – 1.2500. The three key support levels are: S1 – 1.2084, S2 – 1.1987, S3 – 1.1876.