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Forex Market: USD/CAD daily trading forecast

Yesterday’s trade saw USD/CAD within the range of 1.2418-1.2490. The pair closed at 1.2466, up 0.09% on a daily basis, following two consecutive daily losses from last week.

At 8:38 GMT today USD/CAD was down 0.21% for the day to trade at 1.2441. The pair touched a daily low at 1.2435 at 8:15 GMT.


United States

NY Empire State Manufacturing Index

The New York Empire State Manufacturing Index probably dropped to a reading of 9.00 in January, according to the median forecast by experts, from 9.95 in the prior month. In November the gauge slipped into negative territory, falling to -1.23, or the lowest level since November 2013, when a reading of -2.21 was reported.

The index is based on the monthly Empire State Manufacturing Survey, which is conducted by the Federal Reserve Bank of New York. About 200 top manufacturing executives respond to a questionnaire, sent out during the first day of the month. They provide their estimates in regard to the performance of several business indicators from the prior month, while also forecasting performance during the upcoming six months.

The ”general business conditions” component of the index is based on a distinct question, posed on the Empire State Manufacturing Survey, which means it is not a weighted average of the other indicators. These indicators, which are only applicable to the manufacturing facilities of survey respondents in the region of New York, include new orders, shipments, unfilled orders, delivery time, inventories, prices paid, prices received, number of employees including contract workers, average employee work week, technology spending and capital expenditures.

The general business conditions component and the sub-indexes for the 11 indicators are calculated by subtracting the percentage of respondents, rating an indicator as ”lower” (a drop), from the percentage of respondents, rating the same indicator as ”higher” (an increase). In case 33% of survey respondents stated that business conditions had improved during the current month, 50% stated that conditions had not changed, and 17% of the respondents stated that conditions had deteriorated, the index would have a reading of 16. Readings above 0.00 are indicative of improving business conditions in the region. Lower-than-anticipated index values will usually have a negative effect on the US dollar. The Federal Reserve Bank of New York is expected to release the official reading at 13:30 GMT.

NAHB Housing Market Index

The National Association of Home Builders (NAHB) Housing Market Index probably rose in February, reaching 58.0, according to expectations, from 57.0 in January. If so, this would be the eighth consecutive month, when the gauge stood in the area above 50.0. The indicator is based on a monthly survey in regard to current home sales and expected sales in the coming six months. Values above the key level of 50.0 indicate that housing market conditions are good. Therefore, higher-than-projected readings would provide support to the greenback. The official data is scheduled for release at 15:00 GMT.


Foreign investment in Canadian securities

Foreign portfolio investment in Canadian securities probably expanded to CAD 5.1 billion in December, according to the median forecast by experts, from CAD 4.29 billion in November. The latter has been the lowest flow of portfolio investments since January 2014, when it was reported to have amounted to CAD 1.22 billion. This indicator reflects the flow of incoming investments in the local stock, bond and money markets. An increasing flow of foreign investments is usually related with a positive economic outlook for the country being invested in. This usually increases demand for its currency and vice versa. Therefore, in case portfolio investment in Canadian securities increased more than anticipated, this would have a certain bullish effect on Canadas dollar. The official report by the Statistics Canada is due out at 13:30 GMT.

Pivot Points

According to Binary Tribune’s daily analysis, the central pivot point for the pair is at 1.2458. In case USD/CAD manages to breach the first resistance level at 1.2498, it will probably continue up to test 1.2530. In case the second key resistance is broken, the pair will probably attempt to advance to 1.2570.

If USD/CAD manages to breach the first key support at 1.2426, it will probably continue to slide and test 1.2386. With this second key support broken, the movement to the downside will probably continue to 1.2354.

The mid-Pivot levels for today are as follows: M1 – 1.2370, M2 – 1.2406, M3 – 1.2442, M4 – 1.2478, M5 – 1.2514, M6 – 1.2550.

In weekly terms, the central pivot point is at 1.2522. The three key resistance levels are as follows: R1 – 1.2626, R2 – 1.2803, R3 – 1.2907. The three key support levels are: S1 – 1.2345, S2 – 1.2241, S3 – 1.2064.

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