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Forex Market: USD/CAD daily trading forecast

Yesterday’s trade saw USD/CAD within the range of 1.2535-1.2624. The daily high has also been the highest level since February 12th, when a high of 1.2648 was recorded. The pair closed at 1.2574, gaining 0.31% on a daily basis.

At 8:39 GMT today USD/CAD was up 0.39% for the day to trade at 1.2623. The pair touched a daily high at 1.2624 at 8:31 GMT.

Fundamentals

United States

Services PMI by Markit – preliminary estimate

Activity in the US sector of services probably remained little changed in February, with the corresponding preliminary Purchasing Managers Index coming in at a reading of 54.0. In January the final seasonally adjusted PMI stood at 54.2, up from a preliminary value of 54.0. The PMI is based on data collected from a representative panel of more than 400 private sector companies, which encompasses industries such as transport and communication, financial intermediaries, business and personal services, computing & IT and hotels and restaurants. Values above the key level of 50.0 indicate optimism (expanding activity). Higher-than-expected PMI readings would support the US dollar. The preliminary data by Markit Economics is due out at 14:45 GMT.

Consumer Confidence Index

Confidence among consumers in the United States probably lowered in February, with the corresponding index coming in at a reading of 99.6 from 102.9 in January. The latter has been the highest index value since August 2007, when the gauge was reported at 105.0.

This indicator measures the level of individuals confidence in the US economic development. It is considered as a leading indicator, as it gives an early insight into consumer spending, which accounts for most of the nations GDP.

The index has 1985 as a base year, when the base value was 100. This year was chosen, as it was neither a peak nor a bottom. The Consumer Confidence Index (CCI) is calculated on the basis of a household survey, which reflects consumers opinion on current conditions and future expectations regarding the US economy. Opinions on current conditions account for 40% of the index, while expectations of future conditions account for the remaining 60%. The surveys objective is to define consumer attitudes and buying intentions, while the data are filtered by age, income and region.

A sample of 5 000 households in the United States serves as a basis for the survey. Each month respondents give their opinion based on the answers to five questions: Current business conditions; Business conditions for the next six months; Current employment conditions; Employment conditions for the next six months; Total family income for the next six months. Respondents may answer each question as “positive”, “negative” or “neutral”.

Each of the five questions is given a “relative value”, or the positive responses are divided by the sum of the positive and negative responses. The relative value is then compared against each relative value from the base year (1985). The comparison of the relative values leads to the “index value” for all five questions. These index values are then averaged in order to form the value of the CCI.

In case the index dropped more than anticipated, this might lead to a sell-off of the US dollar, as lower confidence suggests a lesser willingness to spend and, respectively, a stagnating economic growth. The Conference Board research group is to publish the official index reading at 15:00 GMT.

Fed Chair Yellens testimony

At 15:00 GMT Federal Reserve Chair Janet Yellen is expected to take a statement on monetary policy in front of the US Senate Banking Committee, as global markets await clues over the timing of Feds first rate hike since 2006. Moderate-to-high volatility of the US dollar crosses is usually present during such speeches.

Pivot Points

According to Binary Tribune’s daily analysis, the central pivot point for the pair is at 1.2578. In case USD/CAD manages to breach the first resistance level at 1.2620, it will probably continue up to test 1.2667. In case the second key resistance is broken, the pair will probably attempt to advance to 1.2709.

If USD/CAD manages to breach the first key support at 1.2531, it will probably continue to slide and test 1.2489. With this second key support broken, the movement to the downside will probably continue to 1.2442.

The mid-Pivot levels for today are as follows: M1 – 1.2466, M2 – 1.2510, M3 – 1.2555, M4 – 1.2599, M5 – 1.2644, M6 – 1.2688.

In weekly terms, the central pivot point is at 1.2484. The three key resistance levels are as follows: R1 – 1.2610, R2 – 1.2691, R3 – 1.2817. The three key support levels are: S1 – 1.2403, S2 – 1.2277, S3 – 1.2196.

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