Forex Market: USD/CAD daily trading forecast

Yesterday’s trade saw USD/CAD within the range of 1.2405-1.2519. The pair closed at 1.2486, up 0.47% on a daily basis, marking the first gain in three trading days.

At 10:33 GMT today USD/CAD was down 0.12% for the day to trade at 1.2472. The pair touched a daily low at 1.2470 at 10:32 GMT.

Fundamentals

United States

Non-farm Payrolls, Unemployment Rate

Employers in all sectors of economy in the United States, excluding the farming industry, probably added 240 000 new jobs in February, according to the median forecast by experts, after a job gain of 257 000 in January. If so, this would be the sixth consecutive month, when employment gains exceeded 200 000. However, the projected figure would be the lowest since August 2014, when 180 000 jobs were added.

Employment in retail trade rose by 46 000 in January. The sector of construction continued to add jobs in the same month, marking a gain of 39 000. Health care employment increased by 38 000, while employment in financial services rose by 26 000. Manufacturing employment increased by 22 000, according to the report by the Bureau of Labor Statistics (BLS).

The non-farm payrolls report presents the total number of US employees in any business, excluding the following four groups: farm employees, general government employees, employees of non-profit organizations, private household employees. The reading, released most often, varies between 10 000 and as much as 250 000 – 300 000 at times when economy is performing well. Despite the volatility and the possibility of large revisions, the non-farm payrolls indicator presents the most timely and comprehensive reflection of the current economic state. Total non-farm payrolls account for 80% of the workers, who produce the entire Gross Domestic Product of the United States. In case of a lesser-than-expected gain in jobs, the US dollar would certainly see selling pressure.

Average Hourly Earnings probably increased 0.2% in February compared to January, when earnings rose by another 0.5%. The latter has been the largest monthly rate of increase since July 2011, when earnings grew 0.5%.

The rate of unemployment in the country probably dropped to 5.6% in February from 5.7% in January. In December 2014 the rate was reported at 5.6%, or the lowest since July 2008.

The civilian labor force expanded by 703 000 in January, while the total number of people unemployed was little changed at 9.0 million. In January the unemployment rate for adult men stood at 5.3%, for adult women at 5.1%, or little changed, while the rate for teenagers increased to 18.8%. The number of long-term unemployed in January (those jobless for 27 weeks or more) was essentially unchanged at 2.8 million, while accounting for 31.5% of the unemployed. The number of persons in part-time employment for economic reasons was essentially unchanged at 6.8 million during the same period, according to the BLS.

The unemployment rate represents the percentage of the eligible work force that is unemployed, but is actively seeking employment. A person who is not classified as employed or unemployed is excluded from the statistics. One counts as unemployed, if he falls in all of the following categories: he/she was unemployed during the last week; he/she is able bodied; he/she has been seeking employment for a period of at least four weeks, which end during the week when the research is conducted. People, who have been laid off and are awaiting to be hired again, are also classified as unemployed. In case the unemployment rate met expectations or even fell further, this would have a bullish effect on the greenback, because of the positive implications for consumer spending. The Bureau of Labor Statistics will release the official employment data at 13:30 GMT.

Balance of Trade

The deficit on US balance of trade probably narrowed to USD 41.70 billion during January from a trade gap of USD 46.56 billion, registered in December. The latter has been the largest shortfall since April 2014, when a deficit of USD 47.04 billion was reported. In December compared to November total exports were 0.8% lower to reach USD 194.9 billion, as recent US dollar strength and a labor dispute at US West Coast ports caused an adverse effect. Total imports surged 2.2% to USD 241.4 billion during the same period, as imports of non-petroleum products soared to the highest level on record.

The trade balance, as an indicator, measures the difference in value between the country’s exported and imported goods and services during the reported period. It reflects the net export of goods and services, or one of the components to form the Gross Domestic Product. Generally, exports are linked to economic growth, while imports indicate how strong domestic demand is. In case the trade balance deficit shrank more than anticipated, this would increase demand for the greenback. The Bureau of Economic Analysis will release the official trade data at 13:30 GMT.

Canada

Balance of Trade

The deficit on Canadian balance of trade probably widened a third consecutive month in January, reaching CAD 1.00 billion, according to the median estimate by experts, following a deficit figure of CAD 0.65 billion in December. If so, this would be the most considerable trade gap since November 2013, when a deficit of CAD 1.53 billion was reported. In December total exports climbed 1.5% year-on-year to reach CAD 44.1 billion, as exports of metal and non-metallic mineral products surged 13.1% to a record CAD 5.6 billion. At the same time, total imports grew 2.3% to CAD 44.7 billion in December, supported by an increase in imports of energy products, motor vehicles and parts, as well as metal and non-metallic mineral products. Imports of energy products rose 9.3% to CAD 3.5 billion, imports of motor vehicle engines and motor vehicle parts were up 5.4%, while imports of metal and non-metallic mineral products surged 6.1% to CAD 4.2 billion, according to the report by the Statistics Canada.

In case the trade balance deficit widened more than expected, this would have a bearish effect on the Canadian dollar. Statistics Canada will release the official trade data at 13:30 GMT.

Pivot Points

According to Binary Tribune’s daily analysis, the central pivot point for the pair is at 1.2470. In case USD/CAD manages to breach the first resistance level at 1.2535, it will probably continue up to test 1.2584. In case the second key resistance is broken, the pair will probably attempt to advance to 1.2649.

If USD/CAD manages to breach the first key support at 1.2421, it will probably continue to slide and test 1.2356. With this second key support broken, the movement to the downside will probably continue to 1.2307.

The mid-Pivot levels for today are as follows: M1 – 1.2332, M2 – 1.2389, M3 – 1.2446, M4 – 1.2503, M5 – 1.2560, M6 – 1.2617.

In weekly terms, the central pivot point is at 1.2519. The three key resistance levels are as follows: R1 – 1.2654, R2 – 1.2801, R3 – 1.2936. The three key support levels are: S1 – 1.2372, S2 – 1.2237, S3 – 1.2090.