Forex Market: USD/CAD daily trading forecast

Friday’s trade saw USD/CAD within the range of 1.2530-1.2450. The cross settled 0.05% higher at 1.2514.

At 8:47 GMT today USD/CAD was down 0.01% for the day to trade at 1.2513. The pair ranged between 1.2494 and 1.2527 during the day.

Fundamentals

United States

The Bureau of Economic Analysis reported on Friday that the US economy expanded by an annualized 2.2% in the fourth quarter, exceeding projections of 2.1%. The initial Q4 reading, released on January 30th, reflected growth of 2.6%.

Data by the Bureau today is expected to show that personal income rose by 0.4% on a monthly basis in January, up from 0.3% in December, which would be the 13th straight month of growth. Meanwhile, personal spending likely contracted for a second straight month, with the corresponding gauge projected to come in at -0.1% from -0.3% in December.

A report by Markit Economics is expected to show at 14:45 GMT that activity in the US sector of manufacturing expanded at the pace estimated in a Feb 20th preliminary report, with the Final US Manufacturing PMI projected at 54.3, compared to 53.9 a month earlier.

The more widely tracked report on manufacturing, issued by the Institute for Supply Management, will likely show a slowdown in activity from the previous month, but still a solid expansion. The ISM Manufacturing PMI, due at 15:00 GMT, probably eased for a fourth straight month to 53.1 in February from 53.5 in January. Nevertheless, if confirmed, this would be 21st straight month of growth in the sector.

Canada

Data by Statistics Canada, due at 13:30 GMT, will likely show that the nations current account deficit shrank further in the fourth quarter. The current account balance in the three months through December likely came in at CAD-7.4 billion, compared to a deficit of CAD8.4 billion the prior three months. If confirmed, this would be the fourth straight quarter of contraction.

Meanwhile, the Canadian Manufacturing PMI probably fell for a third straight month in February, slipping to 50.3, according to analysts’ median estimate, from 51.0 in the prior month.

The PMI report is based on data collected from monthly replies to questionnaires sent to supply managers in over 400 industrial companies. The PMI is a compound index based on five individual indexes: new orders, production, employment, delivery time, stocks of purchases. Values of the index above the key level of 50.0 indicate overall increase in activity in the sector, while readings below 50.0 are indicative of contraction in activity. PMIs are earlier indicators of economic conditions published on a monthly basis and are available much before the publication of relevant data from government authorities. This way they provide earlier insight about economic development trends. In case activity in the sector slowed down more than expected, this would have a bearish effect on the loonie. Royal Bank of Canada (RBC) will release the official PMI data at 14:30 GMT.

Pivot points

According to Binary Tribune’s daily analysis, the central pivot point for the pair is at 1.2498. In case USD/CAD manages to breach the first resistance level at 1.2546, it will probably continue up to test 1.2578. In case the second key resistance is broken, the pair will probably attempt to advance to 1.2626.

If USD/CAD manages to breach the first key support at 1.2466, it will probably continue to slide and test 1.2418. With this second key support broken, the movement to the downside will probably continue to 1.2386.

The mid-Pivot levels for today are as follows: M1 – 1.2402, M2 – 1.2442, M3 – 1.2482, M4 – 1.2522, M5 – 1.2562, M6 – 1.2602.

In weekly terms, the central pivot point is at 1.2522. The three key resistance levels are as follows: R1 – 1.2656, R2 – 1.2798, R3 – 1.2932. The three key support levels are: S1 – 1.2380, S2 – 1.2246, S3 – 1.2104.