Forex Market: EUR/CAD daily trading forecast

Yesterday’s trade saw EUR/CAD within the range of 1.4025-1.4176. The pair closed at 1.4121, gaining 0.43% on a daily basis.

At 8:16 GMT today EUR/CAD was up 0.14% for the day to trade at 1.4139. The pair touched a daily high at 1.4159.

Fundamentals

Euro zone

Italian unemployment

The rate of unemployment in Italy probably remained steady at 12.6% in October. In September the number of unemployed persons was reported at 3.23 million, or an increase by 1.5% compared with the prior month. Unemployment rate among persons aged 15-24 was 42.9% in September, or down 0.8 percentage points from August, according to data by the Istat. The number of people in employment rose to 22.457 million in September, or a monthly increase by 0.4%. In case the rate of unemployment lowered, this might provide support to the common currency. Istat is to report the official rate at 9:00 GMT.

Italian Consumer Price Index (CPI) – preliminary estimate

Italys preliminary annualized consumer inflation was probably at 0.1% in November, matching the final rate of inflation for October, reported on November 13th. In October costs of education rose the most, or at an annualized rate of 0.9%, alongside costs of furnishing, household equipment and household maintenance (+0.9%) and followed by prices of clothing and footwear (+0.5%). Prices of regulated energy products fell at an annualized rate of 2.6% in October, following a 6.6% slump in September, while cost of services related to communication decreased 1.0% in October, after a 5.6% drop in the preceding month.

Key categories, included in Italys Consumer Price Index, are food and non-alcoholic beverages (accounting for 16% of total weight), transport (15%), restaurants and hotels (11%) and housing, water, electricity and other fuels (10%). Other categories are clothing and footwear (9%), furnishing and household equipment (8%), recreation and culture (8%) and health (also 8%). Communication, education, alcoholic beverages, tobacco and other goods and services comprise the remaining 15% of the index.

Nations preliminary annualized CPI, evaluated in accordance with the harmonized methodology, probably accelerated 0.2% in November, according to market expectations. If so, this would match the final HICP estimate for October, which has also been the highest since June, when annual harmonized consumer inflation was reported at 0.2%. The National Institute of Statistics (Istat) is to release the official CPI report at 10:00 GMT.

Euro zone Consumer Price Index (CPI) – preliminary estimate

The annualized preliminary consumer inflation in the Euro zone, evaluated in accordance with Eurostat’s harmonized methodology, probably decelerated to 0.3% in November, according to the median estimate by experts. If confirmed, this would be the lowest level of the HICP since September. In October the final HICP reading pointed to annual inflation rate of 0.4%, which matched the preliminary estimate. In October the highest inflation rates were reported in Austria, Finland and Germany, while Greece and Spain remained in deflation. The largest upward pressure in the regions annual inflation came from restaurants & cafés (+0.08%), rents (+0.07%) and tobacco (+0.05%). At the same time, prices of fuels for transport fell at an annualized rate of 0.17% in October, telecommunication costs were 0.10% lower and prices of heating oil were down 0.09%.

The index shows the change in price levels of a basket of goods and services from consumer’s perspective and also reflects purchasing trends. The main components of the HICP are food, alcohol and tobacco (accounting for 19% of the total weight), energy (11%), non-energy industrial goods (29%) and services (41%).

The HICP is used to evaluate and compare inflation rates between Member States, according to Art. 121 of the Amsterdam’s Agreement and directives by the European Central Bank (ECB), in order the latter to achieve price stability and the implementation of monetary policy. The HICP aggregates are calculated as a weighted average of each member state’s HICP components.

In case the HICP slowed down more than anticipated, thus, distancing from the 2% inflation objective set by the ECB, this would mount selling pressure on the euro, because of the greater possibility of introducing additional monetary policy measures in order to stimulate economic activity.

The annualized preliminary Core HICP for November probably matched the final Core HICP for October, which was reported at 0.7% on November 14th. In September the annualized core inflation was reported at 0.8%. This index excludes volatile categories such as food, energy, alcohol and tobacco. Eurostat is scheduled to release the official inflation data at 10:00 GMT.

Euro zone unemployment

At the same hour, Eurostat will announce the rate of unemployment in the Euro region for October. It probably remained steady at 11.5%, or matching the rate in June, July, August and September and also being the lowest since August 2012. The EU 28 unemployment rate was reported to have remained steady at 10.1% in September, which has been the lowest level since February 2012. According to data by Eurostat, 24.512 million people in the EU28, of whom 18.347 million were in the Euro Area, were unemployed. Compared to August, the number of persons unemployed fell by 108 000 in the EU28 and by 19 000 in the Euro zone. In comparison with September 2013, unemployment declined by 1.818 million in the EU28 and by 826 000 in the Euro zone. Unemployment among persons aged between 15-24 was at 21.6% in the EU28 and 23.3% in the Euro area, compared to 23.5% and 24.0% respectively in September a year ago.

Unemployed are considered to be all persons aged between 15 and 74, who have not been hired during the survey period, have been actively seeking employment during the past four weeks and are able to accept any job proposition right away or in two weeks time. A drop in unemployment in the region would support the single currency, as this would imply more active spending and growth respectively.

Canada

Gross Domestic Product

Canadian Gross Domestic Product (GDP) probably expanded 0.4% in September compared to August, according to the median forecast by experts, following a drop of 0.1% in August compared to July. Canadas economy probably grew at an annualized pace of 2.1% during the third quarter, after in Q2 the GDP expanded 3.1%. The latter has been the fastest rate of growth since Q3 2011, when nations economy grew 4.2%. Final domestic demand rose 0.7% in Q2, after remaining flat in the first quarter. The increase was mostly due to higher household final consumption expenditures. The latter increased 0.9% as a result of increased outlays on goods (+1.2%) and services (+0.7%). Business gross fixed capital formation increased 0.8%, following two consecutive quarters of decline. Investment in residential structures grew 2.9%, contributing the most to the overall gain, according to the report by the Statistics Canada. Exports of goods and services rose 4.2% in the second quarter, following a 0.2% drop in Q1, while imports of goods and services were up 2.7% during the same period.

The GDP represents the total monetary value of all goods and services produced by one nation over a specific period of time. What is more, it is the broadest indicator of a countrys economic activity. The report on GDP is closely watched by traders, operating in the Foreign Exchange Market, as they will usually look for higher rates of growth as a sign that interest rates will follow the same direction. Higher interest rates will attract more investors, willing to purchase assets in the country, while, at the same time, this will increase demand for the national currency. If an economy is experiencing a robust rate of growth, the benefits will eventually affect the end consumer, because of the increased likelihood of spending, while through increased consumer expenditures economy has the potential to expand even further. Therefore, in case Canadas growth outpaced expectations, this would heighten the appeal of the Canadian dollar. Statistics Canada is expected to release the official figure at 13:30 GMT.

Pivot Points

According to Binary Tribune’s daily analysis, the central pivot point for the pair is at 1.4107. In case EUR/CAD manages to breach the first resistance level at 1.4190, it will probably continue up to test 1.4258. In case the second key resistance is broken, the pair will probably attempt to advance to 1.4341.

If EUR/CAD manages to breach the first key support at 1.4039, it will probably continue to slide and test 1.3956. With this second key support broken, the movement to the downside will probably continue to 1.3888.

The mid-Pivot levels for today are as follows: M1 – 1.3922, M2 – 1.3998, M3 – 1.4073, M4 – 1.4149, M5 – 1.4224, M6 – 1.4300.

In weekly terms, the central pivot point is at 1.4029. The three key resistance levels are as follows: R1 – 1.4152, R2 – 1.4389, R3 – 1.4512. The three key support levels are: S1 – 1.3792, S2 – 1.3669, S3 – 1.3432.