Forex Market: USD/CNH daily trading outlook

Yesterday’s trade saw USD/CNH within the range of 6.5309-6.5453. The pair closed at 6.5348, inching 0.02% on a daily basis. It has been the 7th gain in the past 18 trading days and also a second consecutive one. In addition, the daily high has been the highest level since February 12th, when a high of 6.5499 was registered. In weekly terms, USD/CNH added 0.27% to its value last week, while marking its first gain in the past six weeks. The pair has depreciated 0.85% so far during the current month, following three consecutive months of increases. In January USD/CNH went up 0.38%.

At 8:04 GMT today USD/CNH was inching up 0.06% for the day to trade at 6.5388. The pair touched a daily high at 6.5451 at 7:38 GMT, overshooting the upper range breakout level (R4), and a daily low at 6.5358 during the early phase of the Asian trading session.

On Thursday USD/CNH 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 February 19th, probably increased to 270 000, according to market expectations, from 262 000 reported in the preceding week. The latter has been the lowest number of claims since the business week ended on November 20th, when 260 000 claims were reported.

The 4-week moving average, an indicator lacking seasonal effects, was 273 250, marking a decrease by 8 000 compared to the preceding weeks unrevised average.

The business week, which ended on February 12th has been the 49th 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 rose further, this would have a moderate bearish effect on the US dollar.

The number of continuing jobless claims probably decreased to the seasonally adjusted 2 260 000 during the business week ended on February 12th from 2 273 000 in the preceding week. The latter represented an increase by 30 000 compared to the revised up number of claims reported in the week ended on January 29th. 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.

Durable Goods Orders

Durable goods orders in the United States probably increased 2.5% in January from a month ago, according to the median forecast by experts, following a revised up 5.0% drop in December. If expectations were met, Januarys rate of increase would be the strongest since October 2015, when orders were up 3.0%.

The value of shipments of manufactured durable goods, up in two of the past three months, decreased 2.2% (or USD 5.4 billion) in December to reach USD 235.8 billion. The value of unfilled orders for manufactured durable goods, down for the first time in three months, fell 0.5% (or USD 5.6 billion) in December to reach USD 1,187.6 billion. At the same time, the value of inventories of manufactured durable goods, up for the first time in the past six months, rose 0.5% (or USD 2.1 billion) during the period to USD 397.9 billion, according to data by the US Census Bureau.

Non-defense new orders for capital goods shrank 15.0% (or USD 11.3 billion) in December to USD 64.4 billion, while defense new orders for capital goods dropped 34.4% (or USD 4.9 billion) during the month to USD 9.3 billion.

Durable goods orders, which exclude transportation, probably rose 0.2% in January from a month ago, according to expectations, following a 1.2% slump in December. The latter has been the most considerable monthly drop since December 2013, when core orders were down at a revised up 1.3%. Large ticket orders, such as automobiles for civil use or aircraft, are not present in the calculation, as their value may be in a wide range. This way the index provides a more reliable information in regard to orders for durable goods.

In case the general index rose at a faster-than-projected pace, this would have a strong bullish effect on the US dollar, due to positive implications in regard to the wider gauge of production, factory orders. The US Census Bureau is scheduled to release the official report at 13:30 GMT.

Daily and Weekly Pivot Levels

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

R1 – 6.5361
R2 – 6.5374
R3 (range resistance) – 6.5388
R4 (range breakout) – 6.5427

S1 – 6.5335
S2 – 6.5322
S3 (range support) – 6.5308
S4 (range breakout) – 6.5269

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

Central Pivot Point – 6.5172
R1 – 6.5489
R2 – 6.5698
R3 – 6.6015

S1 – 6.4963
S2 – 6.4646
S3 – 6.4437