Forex Market: USD/CAD daily trading outlook

Written by Miroslav Marinov

Miroslav Marinov, a financial news editor at TradingPedia, is engaged with observing and reporting on the tendencies in the Foreign Exchange Market, as currently his focus is set on the major currencies of eight developed nations worldwide.

, | Updated: October 30, 2024

Yesterday’s trade saw USD/CAD within the range of 1.2994-1.3121. The pair closed at 1.3071, rising 0.50% compared to Fridays close. It has been the 154th gain in the past 281 trading days and also a second consecutive one. The daily high has been the highest level since June 2nd, when a high of 1.3145 was registered. The major pair has increased its loss to 0.76% so far in June, following a 4.31% surge in the prior month.

At 7:30 GMT today USD/CAD was losing 0.67% on the day to trade at 1.2984. The pair touched a daily high at 1.3087 during the early phase of the Asian trading session, overshooting the daily R1 level, and a daily low at 1.2984 during early European trade.

Meanwhile, crude oil futures marked their 64th drop out of the past 136 trading days on June 27th. Oil for August delivery went down as low as $45.84 per barrel, or its lowest price level since May 13th, and closed at $46.33, plunging 2.75% compared to Friday’s close. As of 7:54 GMT today the commodity was gaining 2.03% to trade at $47.27, after going up as high as $47.42 per barrel earlier.

On Tuesday USD/CAD trading may be influenced by the following macroeconomic reports as listed below.

Fundamentals

United States

Gross Domestic Product – final estimate

The final estimate of the US Gross Domestic Product probably pointed to an annualized rate of growth of 1.0% in the first quarter of 2016. If so, it would exceed the 2nd GDP estimate, reported on May 27th, pointing to a 0.8% growth. The flash estimate revealed a 0.5% surge in Q1.

According to the May 27th report, personal consumption expenditure (PCE) added 1.29 percentage points to growth, up from 1.27 percentage point in the preliminary estimate, while rising at an annualized 1.9% in Q1. Fixed investment subtracted 0.25 percentage points from growth (-0.27% in the preliminary estimate), while shrinking 1.5% during the period. Non-residential investment decreased 6.2% in Q1, accelerating from a 5.9% decline in the preliminary estimate, while residential investment expanded 17.1%, accelerating from a 14.8% surge in the preliminary report.

Private inventories subtracted 0.20 percentage points from US growth in Q1 2016, as business entities accumulated inventories at the amount of USD 69.6 billion compared to USD 60.9 billion, as reported previously.

International trade subtracted 0.21 percentage points from growth in Q1 compared to -0.34 percentage points in the preliminary report. US exports contracted 2.0% in the first quarter of 2016 compared to a 2.6% decline in the preliminary release, while US imports fell 0.2% during the period compared to a 0.2% surge reported previously.

In case the final GDP met or even exceeded market expectations in Q1, this would certainly heighten the appeal of the US dollar. The official report is due out at 12:30 GMT.

S&P/Case-Schiller Home Price Index

At 13:00 GMT Standard & Poors/Case-Schiller will report on the performance of their House Price Index, which measures the change in values of single-family homes in 20 metropolitan areas across the United States. The report serves as a gauge of the US housing markets health. According to the median estimate by experts, home prices in the 20 areas probably rose 5.5% in April compared to April 2015, following a 5.4% surge in March. If expectations were met, Aprils rate of increase would be the sharpest one since January, when home values climbed 5.7% year-on-year. Within a recovering economy, a sharper-than-projected gain in prices will usually have a limited-to-moderate bullish effect on the local currency.

Consumer Confidence Index by the Conference Board

Confidence among consumers in the United States probably improved in June, with the corresponding index coming in at a reading of 93.3, according to market expectations. In May the gauge was reported at 92.6, or the lowest level since February.

This indicator measures the level of individuals confidence in the US economic development. It is considered as a leading indicator, as it gives an early insight into consumer spending, which accounts for a major part of the nations GDP.

In case the index came above expectations, this would have a strong bullish effect on the US dollar, as higher confidence suggests a greater willingness to spend and, respectively, an accelerated economic growth. The Conference Board research group is to publish the official index reading at 14:00 GMT.

Bond Yield Spread

The yield on Canada’s 2-year government bonds went as high as 0.543% on June 27th, after which it closed at 0.488% to lose 5.4 basis points (0.054 percentage point) compared to June 24th.

Meanwhile, the yield on US 2-year government bonds climbed as high as 0.605% on June 27th, after which it fell to 0.594% at the close to lose 4.3 basis points (0.043 percentage point) compared to June 24th.

The spread between 2-year US and 2-year Canadian bond yields, which reflects the flow of funds in a short term, rose to 0.106% on June 27th from 0.095% on June 24th. The June 27th yield spread has been the largest one since June 23rd, when the difference was 0.159%.