Forex Market: USD/CAD daily trading outlook

Yesterday’s trade saw USD/CAD within the range of 1.3259-1.3378. The pair closed at 1.3291, shedding 0.34% on a daily basis. It has been the 22nd drop in the past 45 trading days and also a third consecutive one. The daily low has been the lowest level since November 19th 2015, when the pair registered a low of 1.3242.

At 7:21 GMT today USD/CAD was edging up 0.27% on the day to trade at 1.3327. The pair touched a daily high at 1.3338 at 6:49 GMT, undershooting the upper range breakout level (R4), and a daily low at 1.3279 during the early phase of the Asian trading session.

Canada’s dollar continued to gain ground against its US counterpart, as crude oil futures surged to highs unseen since January 4th on Monday. March 7th marked the 30th gain in oil prices out of the past 57 trading days and also the second consecutive one. Oil futures for April delivery went up as high as $38.11 per barrel on March 7th and closed at $37.88. As of 7:29 GMT today the commodity was losing 0.95% on a daily basis to trade at $37.52 per barrel, after going down as low as $37.36 earlier. Oil has appreciated 11.17% so far during the current month, following a 0.39% gain in February.

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

Fundamentals

Canada

Housing Starts, Building Permits

The number of housing starts in Canada probably rose to the seasonally adjusted annual level of 180 000 in February from 165 861 in January. The latter has been the lowest number of starts since February 2015, when a revised up figure of 156 300 was reported. The multi-unit segment registered a 5.3% slump to 95 406 units in January, while the single-detached segment rose 1.0% to 58 295 units.

Housing starts are considered as a key indicator, reflecting the strength of the nation’s housing sector. In case the number of housing starts increased more than anticipated in February, this would have a moderate bullish effect on the loonie. The official report by the Canadian Mortgage and Housing Corporation is due out at 13:15 GMT.

At the same time, the overall value of building permits in the country, issued by municipalities, probably decreased 2% in January, according to expectations. The total value of building permits in Canada went up 11.3% to reach CAD 6.9 billion in December compared to a month ago, supported by an increase in permits for multi-family dwellings in Quebec, Ontario, British Columbia and Alberta. The value of residential permits rose 16.3% to reach CAD 4.7 billion in December, as gains were observed in almost every province with the exception of Saskatchewan. The value of non-residential building permits was up 2.5% to reach CAD 2.3 billion in December.

Building permits, as an indicator, provide information regarding demand in Canada’s housing sector. In case the total value of permits fell more than expected in January from a month earlier, this would have a limited bearish effect on the Canadian dollar. Statistics Canada is expected to release the official numbers at 13:30 GMT.

Daily and Weekly Pivot Levels

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

R1 – 1.3302
R2 – 1.3313
R3 (range resistance) – 1.3325
R4 (range breakout) – 1.3356

S1 – 1.3280
S2 – 1.3268
S3 (range support) – 1.3258
S4 (range breakout) – 1.3226

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

Central Pivot Point – 1.3404
R1 – 1.3500
R2 – 1.3684
R3 – 1.3780

S1 – 1.3220
S2 – 1.3124
S3 – 1.2940