Forex Market: USD/CAD daily trading outlook

Yesterday’s trade saw USD/CAD within the range of 1.2782-1.2898. The pair closed at 1.2842, edging up 0.19% on a daily basis. It has been the 39th gain in the past 73 trading days and also a second consecutive one. USD/CAD has depreciated 1.50% so far during the current month, following two consecutive months of decline.

At 7:33 GMT today USD/CAD was edging down 0.30% on the day to trade at 1.2804. The pair touched a daily high at 1.2850 during the early phase of the Asian trading session, undershooting the daily R1 level, and a daily low at 1.2801 at 7:02 GMT.

Canada’s dollar eased from the recent nine-month highs against its US counterpart, as crude oil futures continued to distance from highs unseen since November 2015 on April 14th. Thursday marked the 40th drop in oil prices out of the past 84 trading days. Oil futures for May delivery went down as low as $40.84 per barrel on April 14th and closed at $41.43, tumbling 0.67% on the day. As of 8:03 GMT today the commodity was edging up 0.39% to trade at $41.59, after going up as high as $41.71 per barrel earlier.

On Friday USD/CAD trading may be influenced by the following macroeconomic reports and other events as listed below.

Fundamentals

United States

New York Empire State Manufacturing Index

The New York Empire State Manufacturing Index probably improved to a value of 1.00 in April, according to the median forecast by experts, from 0.62 in March. If market expectations were met, this would be the highest index reading since July 2015, when the gauge was reported at a level of 3.86.

In March the gauges for new orders and shipments registered levels well above 0.00 for the first time in the past several months, while employment levels remained stable. In addition, the six-month outlook improved, as the index for future new orders reached a level unseen in over a year.

Index readings above 0.00 are indicative of improving business conditions in the region. Higher-than-anticipated index values will usually have a moderate bullish effect on the US dollar. The Federal Reserve Bank of New York is expected to release the official reading at 12:30 GMT.

Industrial Production

Industrial output in the United States probably rose at a monthly rate of 0.1% in March, according to market expectations, following a 0.5% contraction in the prior month.

In February output in the US mining sector decreased 1.4%, while contracting at an average pace of 1.3% during the last 6 months.

The gauge for utilities registered a 4.0% monthly decrease in February, as demand for heating diminished due to unusually warm weather.

Manufacturing production, which accounts for almost three quarters of total industrial production, rose 0.2% in February.

In case the general index of industrial activity advanced more than anticipated in March, this would be dollar positive. The Board of Governors of the Federal Reserve is to release the production data at 14:15 GMT.

Thomson Reuters/Michigan Consumer Sentiment Index

The monthly survey by Thomson Reuters and the University of Michigan may show that consumer confidence in the United States improved in April. The preliminary reading of the corresponding index, which usually comes out two weeks ahead of the final data, probably rose to 92.5 during the current month from a final reading of 91.0 in March. The latter came well above the preliminary reading of 90.0, which was reported on March 18th. If expectations were met, Aprils reading would be the highest since December 2015, when a level of 92.6 was reported.

The sub-index of current economic conditions fell to a final reading of 105.6 in March, while matching the preliminary value, but falling from a final 106.8 in the preceding month.

The sub-index of consumer expectations came in at a reading of 81.5, up from a preliminary value of 80.0 in March, but down from a final reading of 81.9, registered in February.

Participants in the March survey expected that the rate of inflation will be at 2.7% during the next year, or matching the rate in the preliminary release, but higher than the expected rate in the February survey.

In case the gauge of consumer sentiment increased at a steeper pace than projected in April, this would have a moderate-to-strong bullish effect on the greenback. The preliminary reading is due out at 14:00 GMT.

Feds Evans speech

At 16:30 GMT the Fed President for Chicago, Charles Evans, is expected to take a statement. His remarks may introduce limited-to-moderate volatility of the currency pairs containing the US dollar.

Canada

Manufacturing Sales

Manufacturing sales in Canada probably dropped for the first time in four months in February, going down at a monthly rate of 1.5%, according to market expectations. In January compared to December 2015 shipments were 2.3% higher, which has been the steepest monthly increase since March 2015. The Monthly Survey of Manufacturing features statistical data regarding sales of finished goods, inventories, unfilled orders and new orders in Canadas sector of manufacturing. About 10 500 items and 27 000 companies are encompassed.

Manufacturing sales are considered as an indicator of demand in the future. A decrease in the number of goods and unsold inventories suggests, that demand is sufficient and vice versa. At the same time, a drop in sales (shipments) suggests a weaker demand. Therefore, in case shipments decreased at a faster pace than anticipated, this might have a limited-to-moderate bearish effect on the Canadian dollar. Statistics Canada will release the official data at 12:30 GMT.

Daily and Weekly Pivot Levels

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

R1 – 1.2853
R2 – 1.2863
R3 (range resistance) – 1.2874
R4 (range breakout) – 1.2906

S1 – 1.2831
S2 – 1.2821
S3 (range support) – 1.2810
S4 (range breakout) – 1.2778

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

Central Pivot Point – 1.3050
R1 – 1.3148
R2 – 1.3316
R3 – 1.3414

S1 – 1.2882
S2 – 1.2784
S3 – 1.2616