Forex Market: USD/CAD daily trading outlook

Yesterday’s trade saw USD/CAD within the range of 1.3813-1.3917. The pair closed at 1.3895, rising 0.39% on a daily basis and marking its first gain in the past four trading days. The daily rate of increase has been the steepest one since December 17th, when the pair advanced 1.17%. In addition, the daily high has been the highest level since December 23rd, when a high of 1.3936 was registered.

At 9:44 GMT today USD/CAD was up 0.01% for the day to trade at 1.3903. The pair touched a daily high at 1.3906 in early Asian trade and a daily low at 1.3866 at 7:15 GMT. Resistance may be encountered in the area around the high from December 28th (1.3917) and then – at the high from December 23rd (1.3936). Support, on the other hand, may be received at the current daily low of 1.3866 and then – close to the hourly 200-period EMA (1.3847).

The Canadian dollar has recently been heavily influenced by a continuous decline in prices of oil. Crude oil futures have declined in 11 out of the past 20 trading days. Oil futures for February delivery were up 0.45% on the day to trade at $36.98 per barrel as of 9:37 GMT, after going up as high as $37.03 earlier. On December 21st the commodity touched a daily low of $33.98 a barrel, which has been the lowest price level since February 13th 2009, when oil futures plunged to as low as $33.81 per barrel. Crude oil has expanded losses to 11.22% of its value so far in December from a 10.58% slump as of December 28th.

On Tuesday USD/CAD trading may be influenced by one macroeconomic report listed below.

Fundamentals

United States

Consumer Confidence Index by the CB

Confidence among consumers in the United States probably improved in December, with the corresponding index coming in at a reading of 92.9, according to market expectations, from 90.4 in November. The latter has been the lowest index value since September 2014, when the gauge was reported at 89.0.

This indicator measures the level of individuals’ confidence in the US economic development. It is considered as a leading indicator, as it gives an early insight into consumer spending, which accounts for most of the nation’s GDP.

In case the index advanced more than anticipated, this would have a strong bullish effect on the US dollar, as higher confidence suggests a greater willingness to spend and, respectively, an accelerated economic growth. The Conference Board research group is to publish the official index reading at 15:00 GMT.

Bond Yields

The yield on US 2-year government bonds climbed as high as 1.059% on December 28th, or the highest level since April 2010, after which it closed at the exact same level to add 5.3 basis points (0.053 percentage point) compared to December 24th. It has been the 21st gain in the past 30 trading days and also a fourth consecutive one.

Meanwhile, the yield on US 10-year government bonds climbed as high as 2.289% on December 28th, or the highest level since December 16th (2.332%), after which it slipped to 2.232% at the close to lose 1.3 basis points (0.013 percentage point) compared to December 24th. It has been the 19th drop in the past 30 trading days and also a second consecutive one.

Daily and Weekly Pivot Levels

By employing the Camarilla calculation method, the daily pivot levels for USD/CAD are presented as follows:

R1 – 1.3905
R2 – 1.3914
R3 (range resistance) – 1.3924
R4 (range breakout) – 1.3952

S1 – 1.3885
S2 – 1.3876
S3 (range support) – 1.3866
S4 (range breakout) – 1.3838

By using the traditional method of calculation, the weekly pivot levels for USD/CAD are presented as follows:

Central Pivot Point – 1.3870
R1 – 1.3948
R2 – 1.4073
R3 – 1.4151

S1 – 1.3745
S2 – 1.3667
S3 – 1.3542