Forex Market: USD/CAD daily trading outlook

Yesterday’s trade saw USD/CAD within the range of 1.3757-1.4102. The pair closed at 1.3794, plummeting 1.84% on a daily basis. It has been the 9th drop in the past 22 trading days and also the sharpest one in at least two years. The daily low has been the lowest level since December 16th, when a low of 1.3724 was registered.

At 9:24 GMT today USD/CAD was losing 0.50% for the day to trade at 1.3726. The pair touched a daily low at 1.3720 at 9:22 GMT and a daily high at 1.3798 during the early phase of the Asian trading session.

Canada’s dollar has received a boost, as on Wednesday crude oil prices marked the sharpest daily increase since January 22nd, going up 8.65%. Oil futures for March delivery went up as high as $32.76 per barrel on February 3rd and closed at a level of $32.47 to mark their 17th gain in the past 34 trading days. As of 9:33 GMT today the commodity was up 0.55% on a daily basis to trade at $32.65 per barrel, after going up as high as $32.96 earlier, or the highest level since Monday. Oil has eased its slump to 2.81% so far during the current month.

On Thursday USD/CAD trading may be influenced by the following macroeconomic reports as listed below.

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 business week ended on January 29th, probably rose to 280 000, according to market expectations, from 278 000 reported in the preceding week. The latter has been the lowest number of claims since the week ended on January 1st 2016, when 277 000 claims were reported.

The 4-week moving average, an indicator lacking seasonal effects, was 283 000, marking a decrease by 2 250 compared to the preceding weeks revised up average.

The business week, which ended on January 22nd has been the 46th consecutive week, when jobless claims stood below the 300 000 threshold, which implied a healthy labor market.

Initial jobless claims number is a short-term indicator, reflecting lay-offs in the country. In case the number of claims met expectations or increased further, this would have a moderate bearish effect on the US dollar.

The number of continuing jobless claims probably fell to the seasonally adjusted 2 240 000 during the business week ended on January 22nd from 2 268 000 in the preceding week. The latter represented an increase by 49 000 compared to the revised up number of claims reported in the week ended on January 8th. 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 13:30 GMT.

Factory Orders

Factory orders in the United States probably shrank 2.8% in December compared to November, according to the median estimate by experts, following another 0.2% drop in the preceding month. If expectations were met, this would be the sharpest monthly rate of decline since December 2014, when a 3.5% contraction was reported. Excluding the sector of transportation, factory orders went down 0.3% in November from a month ago. This indicator reflects the total value of new purchase orders, placed at manufacturers for durable and non-durable goods, and can provide insight into inflation and growth in the US sector of manufacturing. In case the general index of new orders dropped at a faster-than-anticipated rate, this would have a moderate bearish effect on the US dollar, as it implies future growth slowdown. The US Census Bureau will release the official data at 15:00 GMT.

Daily and Weekly Pivot Levels

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

R1 – 1.3826
R2 – 1.3857
R3 (range resistance) – 1.3889
R4 (range breakout) – 1.3984

S1 – 1.3762
S2 – 1.3731
S3 (range support) – 1.3698
S4 (range breakout) – 1.3604

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

Central Pivot Point – 1.4082
R1 – 1.4218
R2 – 1.4463
R3 – 1.4599

S1 – 1.3837
S2 – 1.3701
S3 – 1.3456