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Forex Market: USD/CAD daily trading forecast

Yesterday’s trade saw USD/CAD within the range of 1.2353-1.2644. The daily low has also been the lowest level since January 22nd, when a low of 1.2310 was recorded. The pair closed at 1.2442, losing 0.99% on a daily basis.

At 8:57 GMT today USD/CAD was up 0.11% for the day to trade at 1.2430. The pair touched a daily high at 1.2448 at 8:40 GMT.

Fundamentals

United States

Change in employment

Employers in the US non-farm private sector probably added 225 000 new jobs during January, according to the median estimate by experts, following 241 000 new positions added in December. The latter has been the largest job gain since June 2014, when 281 000 job positions were added. The employment report by Automated Data Processing Inc. (ADP) is based on data that encompasses 400 000 – 500 000 companies employing over 24 million people, working in the 19 major sectors of the economy. The ADP employment change indicator is calculated in accordance with the same methodology, which the Bureau of Labor Statistics (BLS) uses. Published two days ahead of the governments employment statistics, this report is used by traders as a reliable predictor of the official non-farm payrolls data. Creation of jobs is considered of utmost importance for consumer spending, while the latter is a major driving force behind economic growth. In case expectations were exceeded, this would bolster demand for the dollar. The official figure is scheduled to be published at 13:15 GMT.

Non-manufacturing PMI by the ISM

Activity in United States’ sector of services probably was little changed in January, with the corresponding non-manufacturing PMI coming in at a reading of 56.3, according to expectations, up from 56.2 in December. The latter has been the lowest level of the PMI since June 2014, when it was reported at 56.0. This is a compound index, based on the values of four equally-weighted components, that comprise it. These sub-indexes reflect seasonally adjusted new orders, seasonally adjusted employment, seasonally adjusted business activity and supplier deliveries.

The business report is based on data compiled from monthly replies to questions asked of over 370 purchasing and supply executives operating in over 62 different industries, which represent nine divisions from the Standard Industrial Classification (SIC) categories.

Participants can either respond with “better”, “same”, or “worse” to the questions about the industry, in which they operate. The resulting PMI value is measured from 0 to 100. If the index shows a value of 100.0, this means that 100% of the respondents reported an improvement in conditions. If the index shows a value of 0, this means that 100% or the respondents reported a deterioration in conditions. If 100% of the respondents saw no change in conditions, the index will show a reading of 50.0. Therefore, readings above the key level of 50.0 are indicative of expanding activity. In case the index increase was larger than anticipated, this would provide support to the US dollar. The Institute for Supply Management (ISM) is to release the official PMI reading at 15:00 GMT.

Canada

Ivey PMI

Activity among purchasing managers in Canada probably continued to slow down in January, with the correspoding seasonally adjusted PMI coming in at a value of 53.9. However, this would be the seventh consecutive month, during which the indicator inhabited the area above the 50.0 level. In December the index stood at 55.4. This indicator is based on a survey sponsored by Richard Ivey School of Business and Canadian Purchasing Management Association. It encompasses 175 respondents in both public and the private sector, selected in accordance with their geographic location and activity, so that the entire economy is covered. Activity among purchasing managers is closely watched by market players, as managers usually have an early access to data regarding performance of their companies, which could be used as a leading indicator of overall economic activity. Readings above the key level of 50.0 are indicative of optimism (expansion in activity). In case the PMI demonstrated a larger slowdown than expected, this would reduce demand for the Canadian dollar. The official index value is due out at 15:00 GMT.

Pivot Points

According to Binary Tribune’s daily analysis, the central pivot point for the pair is at 1.2480. In case USD/CAD manages to breach the first resistance level at 1.2606, it will probably continue up to test 1.2771. In case the second key resistance is broken, the pair will probably attempt to advance to 1.2897.

If USD/CAD manages to breach the first key support at 1.2315, it will probably continue to slide and test 1.2189. With this second key support broken, the movement to the downside will probably continue to 1.2024.

The mid-Pivot levels for today are as follows: M1 – 1.2107, M2 – 1.2252, M3 – 1.2398, M4 – 1.2543, M5 – 1.2689, M6 – 1.2834.

In weekly terms, the central pivot point is at 1.2635. The three key resistance levels are as follows: R1 – 1.2895, R2 – 1.3057, R3 – 1.3317. The three key support levels are: S1 – 1.2473, S2 – 1.2213, S3 – 1.2051.

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