Forex Market: USD/CAD daily trading outlook

Yesterday’s trade saw USD/CAD within the range of 1.2830-1.2942. The pair closed at 1.2864, edging down 0.36% on a daily basis. It has been the 46th drop in the past 92 trading days and also a second consecutive one. The daily low has been an almost exact test of the low from May 6th. The major pair has pared its advance to 2.40% so far during the current month, following three consecutive months of decline.

At 6:45 GMT today USD/CAD was inching down 0.05% on the day to trade at 1.2857. The pair touched a daily high at 1.2864 during the early phase of the Asian trading session, undershooting the daily R1 level, and a daily low at 1.2847 during early Asian trade as well.

Meanwhile, crude oil futures marked their 57th gain out of the past 103 trading days on May 11th. Oil for June delivery went up as high as $46.36 per barrel on May 11th, or the highest price level since April 29th, and closed at $45.93, surging 2.84% compared to Tuesday’s close. As of 6:53 GMT today the commodity was gaining 0.81% to trade at $46.30, after going up as high as $46.44 per barrel earlier.

On Thursday USD/CAD trading may be influenced by the following macroeconomic reports and other events 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 May 6th, probably fell to 270 000, according to market consensus, from 274 000 in the preceding week. The latter has been the highest number of claims since the business week ended on March 25th, when 276 000 claims were reported.

The 4-week moving average, an indicator lacking seasonal effects, was 258 000, marking an increase by 2 000 compared to the preceding weeks unrevised average.

The business week, which ended on April 29th has been the 61st 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 decreased further, this would have a moderate bullish effect on the US dollar.

The number of continuing jobless claims probably fell to the seasonally adjusted 2 120 000 during the business week ended on April 29th, according to the median forecast by experts, from 2 121 000 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 8 000 compared to the unrevised number of claims reported in the week ended on April 15th. 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.

Import, Export Prices

Prices of imported goods in the United States probably rose for a second consecutive month in April, going up at a monthly rate of 0.5%, according to market expectations. In March import prices were 0.2% higher from a month ago, as imported fuel prices went up 4.9%, while non-fuel prices (consumer goods, foods and beverages, feeds, capital goods) edged down 0.1%. In annual terms, import prices were 6.2% lower in March, which has been the 20th consecutive month of decline. Generally, higher import prices of goods suggest higher rates of consumer inflation.

Prices of exported goods from the United States probably increased 0.1% in April, according to expectations. In March export prices remained unchanged from a month ago, as non-agricultural export prices rose 0.3%, supported by industrial supplies and materials, while agricultural export prices went down 2.5%, dragged down by prices of fruits, soybeans, corn and nuts. In annual terms, export prices slumped 6.1% in March, or for a 19th month in a row. Lower prices of exported goods generally bolster demand abroad, and as US trade accounts for 20% of international trade relations, this also tends to be dollar positive.

The Department of Labor is expected to release the official numbers at 12:30 GMT.

Fed Speakers

At 15:30 GMT the Federal Reserve President for Boston, Eric Rosengren, is expected to take a statement, followed by the Fed President for Kansas and also a FOMC member, Esther George, at 17:30 GMT. Their remarks may trigger a limited-to-moderate volatility of the currency pairs, containing the US dollar.

Canada

New Housing Price Index

Selling prices of new homes in Canada probably rose for a 12th straight month in March, up 0.1%, according to market expectations. In February compared to January prices went up 0.2%. Home values climbed at a rate of 1.8% in February compared to the same month a year ago, following a 1.6% surge during each of the previous three months. The combined region of Toronto and Oshawa, and Vancouver were the top contributors to the overall price increase in February, with home values rising 0.4% and 0.8% month-over-month respectively.

The New Housing Price Index is a key indicator, reflecting the health of the Canadian housing market. Given the current state of the economy, in case prices surged more than anticipated, this would be an indication of a stronger consumer confidence and would, therefore, have a limited bullish effect on the loonie. Statistics Canada will release the official report 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 – 1.2874
R2 – 1.2885
R3 (range resistance) – 1.2895
R4 (range breakout) – 1.2926

S1 – 1.2854
S2 – 1.2843
S3 (range support) – 1.2833
S4 (range breakout) – 1.2802

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