Forex Market: EUR/CAD daily trading forecast

Yesterday’s trade saw EUR/CAD within the range of 1.4376-1.4504. The pair closed at 1.4419, losing 0.19% on a daily basis.

At 6:25 GMT today EUR/CAD was down 0.02% for the day to trade at 1.4414. The pair touched a daily low at 1.4394 at 2:05 GMT.

Fundamentals

Euro zone

Spanish balance of trade

The deficit on Spains trade balance probably widened to 2.4 billion EUR in August, according to the median forecast by experts. In July the trade gap increased 132% to reach 1.83 billion EUR from 0.79 billion EUR in July 2013. Total exports surged at an annualized rate of 8.7% to the highest value on record, or 21.58 billion EUR, in July. However, total imports rose at a pace of 13.4% to reach 23.41 billion EUR. Shipments to Germany increased 8.5% in July, which has been the most considerable pace since October 2012. Sales to France were 0.9% lower, while those to the United Kingdom dropped 18.2%, marking the seventh consecutive month of decline.

Spain has regular deficits on its trade balance, because of its high imports of fuel and high added value goods.

In case nations trade deficit widened more than anticipated, this might have a bearish effect on the single currency. The Bank of Spain is to release the official trade data at 8:00 GMT.

Euro Area construction output

At 9:00 GMT Eurostat is to report on construction activity in the Euro zone for August. Seasonally adjusted construction output in the region remained flat in July compared to a month ago, following a 0.4% drop in June compared to May. In annual terms, output expanded 0.4% in July. This indicator reflects how resilient construction sector development is and also provides clues over investment activity. Higher rates of increase in output usually provide a limited support to the common currency.

Canada

The annualized index of consumer prices (CPI) in Canada probably slowed down to 2.0% in September, according to market expectations, from 2.1% in August, as the latter matched the rate in July. Shelter costs increased at an annualized rate of 2.8% in August, which followed a 3.0% gain in July. Natural gas prices surged 17.9% in August, after climbing 20.4% in the previous month. Prices of food were up 2.2%, with cost of food purchased from stores rising 2.3% on an annual basis in August, after another 3.2% surge during the prior month. Consumers also paid more for homeowners home and mortgage insurance.

In monthly terms, the CPI probably increased 0.1% in September, after remaining flat in August.

Key categories in Canadian CPI basket are Shelter (accounting for 27.5% of the total weight) and Transportation (19.3%). Other categories include Food (with a 16.1% share), Household Operations, Furnishings and Equipment (11.8%), Recreation, Education and Reading (11.8%), Clothing and Footwear (5.7%), Health and Personal Care (5%), while Alcoholic Beverages and Tobacco Products comprise the remaining 3%.

Bank of Canadas (BoC) annualized Core CPI, which excludes prices of fruits, vegetables, gasoline, fuel oil, natural gas, mortgages, intercity transportation, and tobacco products, probably remained steady at 2.1% in September. In July it was reported at 1.7%. This is the key measure of inflation, on which the central bank bases its decisions regarding monetary policy. In case the Core CPI increased more than projected, but still remained within BoC inflation range target (1-3%), this would support demand for the loonie, as Canadian dollar is also known. The official CPI report by Statistics Canada is due out at 12:30 GMT.

Pivot Points

According to Binary Tribune’s daily analysis, the central pivot point for the pair is at 1.4433. In case EUR/CAD manages to breach the first resistance level at 1.4490, it will probably continue up to test 1.4561. In case the second key resistance is broken, the pair will probably attempt to advance to 1.4618.

If EUR/CAD manages to breach the first key support at 1.4362, it will probably continue to slide and test 1.4305. With this second key support broken, the movement to the downside will probably continue to 1.4234.

The mid-Pivot levels for today are as follows: M1 – 1.4270, M2 – 1.4334, M3 – 1.4398, M4 – 1.4462, M5 – 1.4526, M6 – 1.4590.

In weekly terms, the central pivot point is at 1.4138. The three key resistance levels are as follows: R1 – 1.4240, R2 – 1.4338, R3 – 1.4440. The three key support levels are: S1 – 1.4040, S2 – 1.3938, S3 – 1.3840.