Forex Market: USD/CAD daily trading outlook

Yesterday’s trade saw USD/CAD within the range of 1.2250 – 1.2130. The pair closed 0.68% higher at 1.2229, a fourth straight daily gain, following a 1.09% jump on Monday.

At 7:05 GMT today USD/CAD was up 0.07% for the day to trade at 1.2240. The cross held in a daily range of 1.2217 – 1.2256, the highest in a month.

Fundamentals

United States

The Mortgage Bankers Association will release its mortgage applications data for the week ended May 16th at 11:00 GMT. The MBA Mortgage Applications index measures the change in the number of new applications for mortgages backed by the Association during the reported week. It includes both refinancing and home purchases. A better-than-expected reading should be considered as positive for the US dollar, and vice versa.

The index slid 3.5% in the week ended May 9th, with the the index of refinancing applications dropping 5.9%, while the gauge of loan requests for home purchases fell 0.2%.

Fed minutes

At 18:00 GMT the Federal Open Market Committee (FOMC) will release the minutes from its meeting on policy held on April 28-29th. The minutes offer detailed insights on FOMC’s monetary policy stance. This release is closely examined by traders, as it may provide clues over interest rate decisions in the future. High volatility is usually present after the publication.

The Federal Reserve kept its benchmark interest rate unchanged within the range of 0-0.25% at its latest meeting in a continued effort toward reaching maximum employment and price stability.

“Inflation is anticipated to remain near its recent low level in the near term, but the Committee expects inflation to rise gradually toward 2 percent over the medium term as the labor market improves further and the transitory effects of declines in energy and import prices dissipate,” the Committee said in its after-meeting statement. “When the Committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2 percent.”

Canada

At 12:30 GMT Statistics Canada is expected to report that wholesale sales rose 0.9% in March, reversing a 0.4% drop in February and another 2.9% decline a month earlier. This is a leading indicator of consumer spending. Lower wholesales are indicative of less active retail trade and, respectively, consumption. Therefore, a drop in wholesale sales might have a limited bearish effect on the Canadian dollar, and vice versa.

Pivot points

According to Binary Tribune’s daily analysis, the pair’s central pivot point stands at 1.2203. In case it penetrates the first resistance level at 1.2276, it will encounter next resistance at 1.2323. If breached, upside movement may attempt to advance to 1.2396.

If the cross drops below its S1 level at 1.2156, it will next see support at 1.2083. If the second key support zone is breached, downward movement may extend to 1.2036.

In weekly terms, the central pivot point is at 1.2026. The three key resistance levels are as follows: R1 – 1.2132, R2 – 1.2251, R3 – 1.2357. The three key support levels are: S1 – 1.1907, S2 – 1.1801, S3 – 1.1682.