Forex Market: USD/CAD daily trading forecast

Yesterday’s trade saw USD/CAD within the range of 1.1160-1.1224. The pair closed at 1.1187, gaining 0.06% on a daily basis.

At 8:58 GMT today USD/CAD was up 0.17% for the day to trade at 1.1207. The pair touched a daily high at 1.1220 at 7:25 GMT.

Fundamentals

United States

Personal Income and Personal Spending

Personal spending in the United States probably rose 0.1% in September compared to a month ago, according to market expectations, while personal income was probably up 0.3%. Spending increased 0.5% in August, following a flat performance in July, while personal income rose 0.3%. Disposable personal income (DPI) increased $35.2 billion, or 0.3%, in August. Private wages and salaries rose $30.4 billion in August, compared to an increase by $17.4 billion in the prior month. Higher than expected rates of increase imply good employment conditions and, therefore, are dollar positive. The Bureau of Economic Analysis is to publish the official figures at 12:30 GMT.

Employment Cost Index

Employment Cost Index (ECI) in the United States probably rose 0.5% during the third quarter of the year compared to Q2, following another 0.7% gain in Q2 compared to Q1. The latter has been the fastest rate of increase in employment costs since Q2 2011. This index measures the change in the price of labor, defined as compensation per employee hour worked. It shows changes in the cost of compensation not only for wages and salaries, but also for an extensive list of benefits. The ECI is considered as an indicator, reflecting cost pressures within companies that could trigger price inflation for finished goods and services. A larger than expected rate of increase would generally provide a certain support to the US dollar. The Bureau of Labour Statistics is to release the quarterly data at 12:30 GMT.

Chicago Business Survey

The Chicago Purchasing Managers Index (PMI) probably slowed down to a reading of 60.0 in October from 60.5 during the prior month. If so, this would be the lowest index reading since July. The index reflects business conditions in the regions manufacturing sector and is interrelated with the Manufacturing Index, published by the Institute for Supply Management (ISM). A reading above the key level of 50.0 is indicative of expansion in manufacturing activity. In case the PMI came below expectations, this would reduce the appeal of the US dollar. The MNI Deutche Börse Group will release the official reading of the Chicago barometer at 13:45 GMT.

Reuters/Michigan Confidence Indicator – final estimate

The monthly survey by Thomson Reuters and the University of Michigan may show that consumer confidence in the United States improved in October. The final reading of the corresponding index probably confirmed the preliminary value of 86.4 during the current month, which was reported on October 17th. If confirmed, this would be the highest reading in seven years. The survey encompasses about 500 respondents throughout the country. The index is comprised by two major components, a gauge of current conditions and a gauge of expectations. The current conditions index is based on the answers to two standard questions, while the index of expectations is based on three standard questions. All five questions have an equal weight in determining the value of the overall index.

The sub-index of current economic conditions was reported at 98.9 in October, unchanged from September, while the sub-index of consumer expectations came in at a reading of 78.4 in October, improving from 75.4 in September, according to preliminary data.

In case the gauge of consumer sentiment came in line with expectations or even showed a larger improvement than projected, this would boost demand for the greenback. The official reading is due out at 13:55 GMT.

Canada

Canadian Gross Domestic Product (GDP) probably remained flat in August compared to July, according to market expectations, following another flat performance in July compared to June and a 0.3% growth in June compared to May. Canadas economy grew at an annualized pace of 2.5% in July. 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.

Currency traders 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 support the Canadian dollar. Statistics Canada is expected to release the official figure at 12:30 GMT.

Pivot Points

According to Binary Tribune’s daily analysis, the central pivot point for the pair is at 1.1190. In case USD/CAD manages to breach the first resistance level at 1.1221, it will probably continue up to test 1.1254. In case the second key resistance is broken, the pair will probably attempt to advance to 1.1285.

If USD/CAD manages to breach the first key support at 1.1157, it will probably continue to slide and test 1.1126. With this second key support broken, the movement to the downside will probably continue to 1.1093.

The mid-Pivot levels for today are as follows: M1 – 1.1110, M2 – 1.1142, M3 – 1.1174, M4 – 1.1206, M5 – 1.1238, M6 – 1.1270.

In weekly terms, the central pivot point is at 1.1237. The three key resistance levels are as follows: R1 – 1.1294, R2 – 1.1355, R3 – 1.1412. The three key support levels are: S1 – 1.1176, S2 – 1.1119, S3 – 1.1058.