Yesterday’s trade saw USD/CAD within the range of 1.2591-1.2707. The daily high has also been the highest level since March 20th, when a high of 1.2727 was recorded. The pair closed at 1.2675, up 0.51% on a daily basis and extending gains from Friday.
At 8:13 GMT today USD/CAD was up 0.45% for the day to trade at 1.2738. The pair touched a daily high at 1.2747 at 7:55 GMT.
Fundamentals
United States
Chicago Business Survey
The Chicago Purchasing Managers Index (PMI) probably gained ground to a reading of 51.5 in March, according to expectations, from 45.8 during the prior month. The latter has been the lowest reading since July 2009, when the PMI came in at 43.4. The index reflects business conditions in the regions manufacturing sector and is interrelated with the Manufacturing Index, published by the Institute for Supply Management (ISM). A reading above the key level of 50.0 is indicative of expansion in manufacturing activity. In case the PMI improved more than forecast, this would support demand for the US dollar. The MNI Deutche Börse Group will release the official reading of the Chicago barometer at 13:45 GMT.
Consumer Confidence by the CB
Confidence among consumers in the United States probably remained little changed in March, with the corresponding index coming in at a reading of 96.0, down from 96.4 in February and 103.8 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 slowed down 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 14:00 GMT.
Canada
Gross Domestic Product
Canadian Gross Domestic Product (GDP) probably shrank 0.2% in January compared to December, according to the median forecast by experts, following an expansion of 0.3% in December compared to November. In case Canada’s monthly economic growth went further into negative territory, this would certainly reduce the appeal of the Canadian dollar. Statistics Canada is expected to release the official figure at 12:30 GMT.
Pivot Points
According to Binary Tribune’s daily analysis, the central pivot point for the pair is at 1.2658. In case USD/CAD manages to breach the first resistance level at 1.2724, it will probably continue up to test 1.2774. In case the second key resistance is broken, the pair will probably attempt to advance to 1.2840.
If USD/CAD manages to breach the first key support at 1.2608, it will probably continue to slide and test 1.2542. With this second key support broken, the movement to the downside will probably continue to 1.2492.
The mid-Pivot levels for today are as follows: M1 – 1.2517, M2 – 1.2575, M3 – 1.2633, M4 – 1.2691, M5 – 1.2749, M6 – 1.2807.
In weekly terms, the central pivot point is at 1.2546. The three key resistance levels are as follows: R1 – 1.2687, R2 – 1.2763, R3 – 1.2904. The three key support levels are: S1 – 1.2470, S2 – 1.2329, S3 – 1.2253.
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