Forex Market: USD/CAD daily trading outlook

Yesterday’s trade saw USD/CAD within the range of 1.2030-1.1926. The pair closed 0.49% lower at 1.1957, following a 0.7% loss the previous day.

At 6:44 GMT today USD/CAD was down 0.25% for the day to trade at 1.1928. The cross held in a daily range of 1.1925 – 1.1963 and has lost 1.2% for the week so far.

Fundamentals

United States

The number of people in the United States who filed for unemployment assistance for the first time during the week ended May 9th probably increased to 275 000 from 265 000 in the previous seven days. The 4-week moving average, an indicator used to iron out week-to-week volatility, was at 279 500 last week, below the previous periods average.

Initial jobless claims number is a short-term indicator, reflecting lay-offs in the country. In case the count of claims dropped more than projected, this would have a bullish effect on the greenback.

The number of continuing jobless claims probably rose to 2 240 000 during the week ended May 2nd from 2 228 000 the previous period. This indicator reflects the actual number of people unemployed and currently receiving unemployment benefits, who filed for unemployment assistance at least two weeks ago. The Department of Labor is to release the weekly report at 12:30 GMT.

A separate report might show that annualized producer price inflation in the US probably contracted 0.8% in April from a year earlier, according to the median estimate by experts. This comes after a 0.8% decline in March which was lowest reading since October 2009. Month-on-month, the PPI probably rose 0.2%, the same as in March.

This index reflects the change in prices of over 8 000 products sold by manufacturers during the respective period. The Producer Price Index (PPI) differs from the Consumer Price Index (CPI), which measures the change in prices from consumer’s perspective, due to subsidies, taxes and distribution costs of different types of manufacturers in the country. The simple logic behind this indicator is that if producers are forced to pay more for goods and services, they are more likely to pass these higher costs to the end consumer. Therefore, the PPI is considered as a leading indicator of consumer inflation. Lower-than-expected producer prices would usually have a bearish effect on the greenback.

The nation’s annualized core producer price inflation, which excludes prices of volatile categories such as food and energy, probably rose to 1.1% from 0.9% in March. This indicator is quite sensitive to changes in aggregate demand, thus, it can be used as a leading indicator for the economy. However, because of its restrained scope, it is not suitable for future inflation forecasts. Month-on-month, core PPI is expected to come in at 0.1%. The Bureau of Labor Statistics will report the official PPI performance at 12:30 GMT.

Canada

Selling prices of new homes in Canada probably rose in March by 0.1% from a month earlier, according to analysts expectations. This follows a gain of 0.2% in February. Home values climbed at the annualized rate of 1.4% in February. The New Housing Price Index is a key indicator, reflecting the health of Canadas housing market. In case prices surged more than anticipated, this would be an indication of strong demand and would, therefore, have a bullish effect on the loonie. Statistics Canada will release the official data at 12:30 GMT.

Pivot points

According to Binary Tribune’s daily analysis, the pair’s central pivot point stands at 1.1971. In case it penetrates the first resistance level at 1.2016, it will encounter next resistance at 1.2075. If breached, upside movement may attempt to advance to 1.2120.

If the cross drops below its S1 level at 1.1912, it will next see support at 1.1867. If the second key support zone is breached, downward movement may extend to 1.1808.

In weekly terms, the central pivot point is at 1.2064. The three key resistance levels are as follows: R1 – 1.2190, R2 – 1.2309, R3 – 1.2435. The three key support levels are: S1 – 1.1945, S2 – 1.1819, S3 – 1.1700.