Forex Market: USD/CAD daily trading outlook

Yesterday’s trade saw USD/CAD within the range of 1.2908-1.2980. The pair closed at 1.2917, edging down 0.35% on a daily basis. It has been the 45th drop in the past 91 trading days. The daily low has been an almost exact test of the low from May 9th. The major pair has pared its advance to 2.72% so far during the current month, following three consecutive months of decline.

At 6:51 GMT today USD/CAD was edging down 0.13% on the day to trade at 1.2900. The pair touched a daily high at 1.2938 during the early phase of the Asian trading session, overshooting the range resistance level (R3), and a daily low at 1.2889 at 6:10 GMT.

Meanwhile, crude oil futures marked their 56th gain out of the past 102 trading days on May 10th, due to production concerns in Northern Canada and tension in Nigeria. Oil futures for June delivery went up as high as $44.79 per barrel on May 10th and closed at $44.68, surging 2.85% compared to Monday’s close. As of 7:01 GMT today the commodity was edging down 0.38% to trade at $44.51, after going down as low as $44.35 per barrel earlier.

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

Fundamentals

United States

Monthly Budget Statement

The United States probably recorded a government budget deficit of USD 100 billion in April, according to market expectations, after a budget gap of USD 108 billion during the previous month. The latter has been a 103% increase compared to the figure reported in March 2015.

In March total receipts fell 2.5% to USD 228 billion. Social security and other payroll taxes contributed to USD 95 billion, individual income taxes – USD 77 billion, corporate income taxes – USD 33 billion, while other taxes and duties – USD 23 billion.

Total outlays rose 17% to USD 336 billion during March. Social security contributed to USD 76 billion, Medicare – USD 48 billion, defense – USD 54 billion and interest on debt – USD 24 billion. In addition, other outlays were estimated at USD 134 billion, according to the report by the US Treasury.

The current fiscal year-to-date budget gap amounted to USD 461 billion, or a 5% increase compared to the same period a year earlier.

A smaller-than-projected budget deficit in April would have a moderate bullish effect on the US dollar. The Financial Management Service is to publish the official figure at 18:00 GMT.

Daily and Weekly Pivot Levels

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

R1 – 1.2924
R2 – 1.2930
R3 (range resistance) – 1.2937
R4 (range breakout) – 1.2957

S1 – 1.2910
S2 – 1.2904
S3 (range support) – 1.2897
S4 (range breakout) – 1.2877

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

Central Pivot Point – 1.2773
R1 – 1.3089
R2 – 1.3268
R3 – 1.3584

S1 – 1.2594
S2 – 1.2278
S3 – 1.2099