Forex Market: USD/CAD daily trading outlook

Yesterday’s trade saw USD/CAD within the range of 1.3051-1.3216. The pair closed at 1.3064, falling 0.85% on a daily basis. It has been the 29th drop in the past 61 trading days, a second consecutive one and also the steepest one since March 17th, when the cross went down 0.95%. The daily low has been the lowest level since March 23rd, when a low of 1.3034 was registered. USD/CAD has depreciated 3.55% so far during the current month, following a 3.10% drop in February.

At 6:45 GMT today USD/CAD was edging down 0.08% on the day to trade at 1.3052. The pair touched a daily high at 1.3081 during late Asian trade, overshooting the daily R1 level, and a daily low at 1.3051 during the early phase of the Asian session.

Canada’s dollar continued to gain ground against its US counterpart on Tuesday, after Fed Chair Janet Yellen used a rather cautious tone in her statement at the Economic Club of New York. According to extracts from her speech on March 29th: “…this expectation of fading headwinds and a rising neutral rate is a key reason for the FOMCs assessment that gradual increases in the federal funds rate over time will likely be appropriate. That said, this assessment is only a forecast. The future path of the federal funds rate is necessarily uncertain because economic activity and inflation will likely evolve in unexpected ways.”

“In particular, developments abroad imply that meeting our objectives for employment and inflation will likely require a somewhat lower path for the federal funds rate than was anticipated in December.”

Meanwhile, crude oil futures continued their retreat. March 29th marked the 36th drop in oil prices out of the past 72 trading days and also a fourth consecutive one. Oil futures for May delivery went down as low as $37.92 per barrel on March 29th, or the lowest level since March 16th, and closed at $38.66, plummeting 1.73% on the day. As of 6:49 GMT today the commodity was edging down 0.08% to trade at $38.63, after going down as low as $38.47 per barrel earlier.

On Wednesday USD/CAD trading may be influenced by the following macroeconomic report listed below.

Fundamentals

United States

Change in Employment by ADP

Employers in the US non-farm private sector probably added 194 000 new jobs during March, according to the median estimate by experts, following 214 000 new positions added in February.

Employment in the service-providing segment of the economy increased by 208 000 in February, while employment in the goods-producing sector rose by 5 000 positions. Business activities added 59 000 job positions, construction – 27 000, trade, transportation and utilities – 20 000 and financial activities – 8 000. On the other hand, employment in US manufacturing shrank by 9 000 positions during the same month.

The employment report by Automated Data Processing Inc. (ADP) is based on data that encompasses 400 000 – 500 000 companies employing over 24 million people, working in the 19 major sectors of the economy. The ADP employment change indicator is calculated in accordance with the same methodology, which the Bureau of Labor Statistics (BLS) uses. Published two days ahead of the government’s employment statistics, this report is used by traders as a reliable predictor of the official non-farm payrolls data. Creation of jobs has a direct link to consumer spending, while the latter is a major driving force behind the US economic growth. In case new jobs growth outpaced expectations, this would have a moderate-to-strong bullish effect on the US dollar. The official figure is scheduled to be released at 12:15 GMT.

Daily and Weekly Pivot Levels

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

R1 – 1.3079
R2 – 1.3094
R3 (range resistance) – 1.3110
R4 (range breakout) – 1.3155

S1 – 1.3049
S2 – 1.3034
S3 (range support) – 1.3019
S4 (range breakout) – 1.2973

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

Central Pivot Point – 1.3188
R1 – 1.3385
R2 – 1.3494
R3 – 1.3691

S1 – 1.3079
S2 – 1.2882
S3 – 1.2773