Forex Market: USD/CAD daily trading outlook

Yesterday’s trade saw USD/CAD within the range of 1.3199-1.3092. The pair closed 0.5% lower at 1.3109, dropping for a second day.

At 07:11 GMT today USD/CAD was up 0.02% to trade at 1.3113, holding in a daily range of 1.3104 – 1.3125, and is up 0.2% for the week.

Fundamentals

United States

Employers in all sectors of the US economy, excluding the farming industry, probably added 223 000 new jobs in July, according to the median forecast by experts, matching Junes job creation pace, which was below expectations. In June, job gains occurred in professional and business services, retail trade, health care, financial activities, and in warehousing and transportation.

The nonfarm payrolls report presents the total number of US employees in any business, excluding the following four groups: farm employees, general government employees, employees of non-profit organizations, private household employees. The reading typically varies between 10 000 and as much as 200 000 – 300 000 at times when the economy is performing well. Despite the volatility and the possibility of large revisions, the nonfarm payrolls indicator presents the most timely and comprehensive reflection of the current economic state. Total nonfarm payrolls account for 80% of the workers, who produce the entire Gross Domestic Product of the United States. In case of a lesser-than-expected gain in jobs, the US dollar would certainly see selling pressure.

Average Hourly Earnings probably increased 0.2% in July after remaining flat in June, which ended five straight monthly gains. Average weekly hours most likely remained unchanged for a fourth month at 34.5.

Meanwhile, the countrys rate of unemployment was probably flat at 5.3%, the lowest since April 2008. The unemployment rate represents the percentage of the eligible work force that is unemployed, but is actively seeking employment. A person who is not classified as employed or unemployed is excluded from the statistics. One counts as unemployed, if they fall in all of the following categories: they were unemployed during the last week; they were able bodied; they have been seeking employment for a period of at least four weeks, which end during the week when the research is conducted. People who have been laid off and are awaiting to be hired again are also classified as unemployed. In case the unemployment rate met expectations or even fell further, this would have a bullish effect on the greenback, because of the positive implications for consumer spending. The Bureau of Labor Statistics will release the employment data at 12:30 GMT.

Canada

A slew of data from Canada will become available today. The number of building permits issued by the government probably rose 5.0% in June compared to a month earlier, according to the median estimate by experts. In May, permits issued for new buildings, alterations, additions, renovations tumbled 14.5%, following an upward-revised 12.1% increase in April. This indicator provides information regarding demand in Canada’s housing market and better-than-expected values have a bullish effect on the Canadian dollar. Statistics Canada is to release the data at 12:30 GMT.

A separate report might show that the number of employed people in Canada probably increased by 5 000 in July, according to analysts expectations, following a smaller-than-expected decline of 6 400 in June. Part-time employment fell by 71 200 in June compared to a month earlier, while full-time employment was up by 64 800. 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, Canadas rate of unemployment probably remained unchanged for a fifth straight month at 6.8%. Following the same logic, an increase in the unemployment rate would have a bearish effect on the local currency. Statistics Canada is to release its employment report at 12:30 GMT.

A separate report might show that activity among purchasing managers in Canada probably improved in July, albeit at a considerably slower pace compared to a month earlier, with the corresponding seasonally-adjusted PMI projected to come in at a value of 52.0. The metric dropped to 55.9 in June from 62.3 in May, which was the strongest growth since October 2013.

This indicator is based on a survey sponsored by Richard Ivey School of Business and the Canadian Purchasing Management Association. It encompasses 175 respondents in both the public and private sectors, selected in accordance with their geographic location and activity, so that the entire economy is covered. Activity among purchasing managers is closely watched by market players as managers usually have an early access to data regarding performance of their companies, which could be used as a leading indicator of overall economic activity. Readings at the key level of 50.0 are indicative of no change in business conditions. In case the PMI registers a larger-than-expected drop, this would curb demand for the loonie. The data are due out at 14:00 GMT.

Pivot points

According to Binary Tribune’s daily analysis, the pair’s central pivot point stands at 1.3133. In case it penetrates the first resistance level at 1.3175, it will encounter next resistance at 1.3240. If breached, upside movement may attempt to advance to 1.3282.

If the cross drops below its S1 level at 1.3068, it will next see support at 1.3026. If the second key support zone is breached, downward movement may extend to 1.2961.

In weekly terms, the central pivot point is at 1.3014. The three key resistance levels are as follows: R1 – 1.3170, R2 – 1.3250, R3 – 1.3406. The three key support levels are: S1 – 1.2934, S2 – 1.2778, S3 – 1.2698.