Forex Market: USD/CAD daily forecast

During yesterday’s trading session USD/CAD traded within the range of 1.0888-1.0926 and closed at 1.0906.

At 11:54 GMT today USD/CAD was losing 0.04% for the day to trade at 1.0900. The pair touched a daily low at 1.0894 at 10:58 GMT.

Fundamental view

United States’ annualized index of producer prices (PPI) probably jumped by 1.7% in April, according to the median estimate by experts, after adding 1.4% in the previous month. This index reflects the change in prices of over 8 000 products, sold by manufacturers during the respective period. The PPI differs from the CPI, which measures the change in prices from consumer’s perspective, due to subsidies, taxes and distribution costs of different types of manufacturers in the country. In case producers are forced to pay more for goods and services, they are more likely to pass these higher costs to the end consumer. Therefore, the PPI is considered as a leading indicator of consumer inflation. Higher than expected producer prices would have a bullish effect on the greenback.

Nation’s annualized core PPI, which excludes prices of volatile categories such as food and energy, probably remained steady at 1.4% in April. This indicator is quite sensitive to changes in aggregate demand, thus, it can be used as a leading indicator for the economy. However, because of its restrained scope, it is not suitable for future inflation forecasts.

The US Bureau of Labor Statistics is expected to publish the official PPI readings at 12:30 GMT. Higher-than-expected readings would support greenback’s demand.

Technical view

According to Binary Tribune’s daily analysis, in case USD/CAD manages to breach the first resistance level at 1.0925, it will probably continue up to test 1.0945. In case the second key resistance is broken, the pair will probably attempt to advance to 1.0963.

If USD/CAD manages to breach the first key support at 1.0887, it will probably continue to slide and test 1.0869. With this second key support broken, the movement to the downside will probably continue to 1.0849.