Forex Market: USD/CAD daily trading outlook

Yesterday’s trade saw USD/CAD within the range of 1.2572-1.2693. The pair closed at 1.2584, edging down 0.16% on a daily basis. It has been the 41st drop in the past 82 trading days and also a second consecutive one. The daily low has been the lowest level since July 6th 2015, when a low of 1.2560 was registered. USD/CAD has depreciated 3.59% so far during the current month, following two consecutive months of decline.

At 6:50 GMT today USD/CAD was edging down 0.35% on the day to trade at 1.2540. The pair touched a daily high at 1.2603 during mid-Asian trading session, undershooting the daily R2 level, and a daily low at 1.2530 at 6:48 GMT.

The loonie reached fresh 10-month highs, as crude oil futures hit fresh 5.5-month highs on Wednesday. April 27th marked the 51st gain in oil prices out of the past 93 trading days. Oil futures for June delivery went up as high as $45.59 per barrel on April 27th, or the highest price level since November 6th 2015, and closed at $45.25, surging 2.75% compared to Tuesday’s close. As of 6:57 GMT today the commodity was edging down 0.42% to trade at $45.06, after going down as low as $44.95 per barrel earlier.

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 April 22nd, probably increased to 252 000, according to market expectations, from 247 000 in the preceding week. The latter has been the lowest number of claims since the week ended on November 24th 1973, when 233 000 claims were reported.

The 4-week moving average, an indicator lacking seasonal effects, was 260 500, marking a decrease by 4 500 compared to the preceding weeks unrevised average.

The business week, which ended on April 15th has been the 59th consecutive week, when jobless claims stood below the 300 000 threshold, which suggested a healthy labor market. It has been the longest streak in almost 43 years.

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 decreased to the seasonally adjusted 2 134 000 during the business week ended on April 15th, according to the median forecast by experts, from 2 137 000 in the preceding week. The latter has been the lowest level since November 4th 2000, when 2 110 000 claims were reported. The figure also represented a decrease by 39 000 compared to the revised up number of claims reported in the week ended on April 1st. 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 US Department of Labor is to release the weekly report at 12:30 GMT.

Gross Domestic Product – preliminary estimate

The preliminary estimate of the US Gross Domestic Product probably pointed to an annualized rate of growth of 0.7% in the first quarter of the year, according to market expectations. The final GDP estimate for Q4, reported on March 25th, pointed to an annual growth of 1.4%, a revision up compared to the second GDP estimate.

Consumer spending in the country rose 2.4% year-on-year in the fourth quarter of 2015, accelerating from a 2.0% surge in the second estimate, and following a 3.0% expansion in the third quarter.

Fixed investment rose at a final 0.4% year-on-year in Q4, up from a 0.1% expansion in the second estimate, as non-residential investment contracted 2.1% and residential investment rose 10.1%. Fixed investment was 3.7% higher in Q3 2015 compared to the same period a year ago.

US exports fell at an annualized rate of 2.0% in Q4, slowing down from a 2.7% growth in the second estimate, following a 0.7% growth in Q3. At the same time, US imports shrank 0.7% year-on-year in the fourth quarter, accelerating from a 0.6% decrease in the second estimate, following a 2.3% gain in the third quarter, according to data by the US Department of Commerce.

In case expectations were met or even a larger slowdown was reported in Q1, this would have a strong bearish effect on the US dollar. The preliminary GDP report is due out 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 – 1.2595
R2 – 1.2606
R3 (range resistance) – 1.2617
R4 (range breakout) – 1.2651

S1 – 1.2573
S2 – 1.2562
S3 (range support) – 1.2551
S4 (range breakout) – 1.2517

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

Central Pivot Point – 1.2751
R1 – 1.2911
R2 – 1.3153
R3 – 1.3313

S1 – 1.2509
S2 – 1.2349
S3 – 1.2107