Forex Market: USD/CAD daily trading forecast

Yesterday’s trade saw USD/CAD within the range of 1.1922-1.1995. The pair closed at 1.1957, losing 0.14% on a daily basis.

At 8:30 GMT today USD/CAD was up 0.21% for the day to trade at 1.1980. The pair broke the first two key weekly resistance levels and touched a daily high at 1.2017 at 7:00 GMT, or the highest level since April 30th 2009.

Fundamentals

United States

Retail Sales

Retail sales in the United States probably decreased 0.1% in December on a monthly basis, according to the median forecast by experts. In November retail sales recorded another 0.7% surge, which has been the fastest monthly pace since March, when sales climbed 1.5%. This result was due to holiday shopping, which bolstered food, auto and clothing sales. Sales of motor vehicles and parts marked the highest increase, or 1.7% in November, followed by sales of building materials (up 1.4%) and clothing (up 1.2%). On the other hand, sales at gasoline stations were 0.8% lower, according to the report by the US Census Bureau.

Annualized retail sales climbed 5.1% in November, following a 4.5% gain in October.

The report on retail sales reflects the dollar value of merchandise sold within the retail trade by taking a sampling of companies, operating in the sector of selling physical end products to consumers. The retail sales report encompasses both fixed point-of-sale businesses and non-store retailers, such as mail catalogs and vending machines. The Census Bureau, which is a part of the Department of Commerce, surveys about 5 000 companies of all sizes, from huge retailers such as Wal-Mart to independent small family firms.

US core retail sales, or retail sales ex autos, probably remained flat in December compared to a month ago, following a 0.5% gain in November. The latter has been the fastest monthly pace since March. This indicator removes large ticket prices and historical seasonality of automobile sales.

The retail sales index is considered as a coincident indicator, thus, it reflects the current state of the economy. It is also considered a pre-inflationary indicator, which investors can use in order to reassess the probability of an interest rate hike or cut by the Federal Reserve Bank. In addition, this indicator provides key information regarding consumer spending trends. Consumer expenditures, on the other hand, account for almost two-thirds of the US Gross Domestic Product. Therefore, a larger-than-expected increase in sales would certainly boost the US dollar. The official report is due out at 13:30 GMT.

Beige Book

At 18:00 GMT the Federal Reserve is to release its “Beige Book” report. It is published eight times during the year. Each of the banks in the 12 Federal Reserve Districts gathers data in regard to current economic situation in the country on the basis of interviews with key business contacts, economists, market experts, and other sources. In case the Beige Book presents an optimistic economic outlook, this will usually support the greenback, while a pessimistic view will have a bearish effect on the currency.

Canadian growth concerns

Canadian dollar kept losing ground against its US counterpart today, as continued slide in prices of oil, the nations largest export, may have a negative reflection on economic growth.

“It’s all about crude,” Jack Spitz, managing director of foreign exchange at National Bank of Canada, said by phone from Toronto, cited by Bloomberg. “A reduction in crude-oil prices will stagnate growth in oil-producing provinces such as Alberta, Newfoundland and likely Saskatchewan. That hits the Canadian economy and the Canadian dollar.”

In December Bank of Canada Governor Stephen Poloz said that the drop in oil prices will probably axe almost a third of a percentage point from growth in 2015.

Pivot Points

According to Binary Tribune’s daily analysis, the central pivot point for the pair is at 1.1958. In case USD/CAD manages to breach the first resistance level at 1.1994, it will probably continue up to test 1.2031. In case the second key resistance is broken, the pair will probably attempt to advance to 1.2067.

If USD/CAD manages to breach the first key support at 1.1921, it will probably continue to slide and test 1.1885. With this second key support broken, the movement to the downside will probably continue to 1.1848.

The mid-Pivot levels for today are as follows: M1 – 1.1867, M2 – 1.1903, M3 – 1.1940, M4 – 1.1976, M5 – 1.2013, M6 – 1.2049.

In weekly terms, the central pivot point is at 1.1828. The three key resistance levels are as follows: R1 – 1.1929, R2 – 1.1990, R3 – 1.2091. The three key support levels are: S1 – 1.1767, S2 – 1.1666, S3 – 1.1605.