Forex Market: EUR/CAD daily trading forecast

Fridays trade saw EUR/CAD within the range of 1.4127 – 1.3808. The pair closed at 1.3824, plunging 1.62% on a daily basis, or the first loss during the trading week, trimming its weekly advance to 1.1%.

At 7:16 GMT today EUR/CAD was up 0.32% for the day to trade at 1.3870. The pair held in a daily range of 1.3801 – 1.3857.

Fundamentals

Eurozone

Germanys seasonally-adjusted index of industrial production expanded by 0.9% on a monthly basis in April, Destatis reported at 06:00 GMT, while Marchs reading received an upward revision to show a 0.4% contraction from the initial -0.5%. Annualized industrial output was up 1.4%, following a revision in Marchs value to show growth of 0.2%. The index reflects the change in overall inflation-adjusted value of output in the sectors of manufacturing, mining and utilities. A better-than-expected value is euro positive, and vice versa.

Meanwhile, the statistics agency also reported that the surplus on Germanys seasonally-adjusted trade balance grew to EUR 22.3 billion during April, the highest in at least 7 years, from EUR 19.4 billion registered in March. This came as a result from a 1.9% jump in exports, compared to projections for a 0.1% increase, while imports slid 1.3%, defying forecasts for a 0.5% jump.

The trade balance, as an indicator, measures the difference in value between country’s exported and imported goods and services during the reported period. It reflects the net export of goods and services, or one of the components to form country’s Gross Domestic Product. Generally, exports reflect economic growth, while imports indicate domestic demand.

Germany registers surpluses on its trade balance on a regular basis, due to the nations traditionally strong shipments of automobiles and other machinery. The country also exports chemical products, hardware, electronic equipment, metals and pharmaceuticals, while its main imports include electronic devices, fuel, vehicle parts and metals.

In case the trade balance surplus increases more than anticipated, this would have a bullish effect on the euro, and vice versa.

Investor confidence

Sentiment among investors in the Eurozone probably remained on positive territory in June for a sixth straight month, with the corresponding index projected to come in at a reading of 18.7 from 19.6 in May. In April it stood at a multi-year high of 20.0.

The index is based on results from the SENTIX survey, one of the most prominent surveys, reflecting the opinions of 2 800 respondents, with 510 of them being institutional investors. Participants present their expectations regarding ten different markets for a period of one and six months. Readings above zero indicate that respondents were predominantly optimistic, while readings below zero show pessimism. Lower-than-expected readings would have a bearish effect on the common currency, and vice versa. The official index value is due out at 08:30 GMT.

Canada

Housing starts in Canada probably rose to the seasonally-adjusted annual level of 185 000 in May, according to analysts expectations, from 181 800 a month earlier. Housing starts are considered as a key indicator, reflecting the strength of the nation’s housing sector. In case the number of housing starts rose more than expected, this should have a bullish effect on the loonie. The Canada Mortgage and Housing Corporation will release the official numbers at 12:15 GMT.

Meanwhile, Statistics Canada is expected to report that the number of building permits probably rose 3.4% in April from a month ago, according to the median estimate by experts. In March, permits issued by the government surged by 11.6%, following a combined 12.6% decline during the previous two months. Building permits, as an indicator, provide information regarding demand in Canada’s housing market. In case the number of permits rose more than anticipated, this should have a bullish effect on the Canadian dollar. The statistics agency is to release its monthly report at 12:30 GMT.

Pivot points

According to Binary Tribune’s daily analysis, the pair’s central pivot point stands at 1.3920. In case it penetrates the first resistance level at 1.4031, it will encounter next resistance at 1.4239. If breached, upside movement may attempt to advance to 1.4350.

If the cross drops below its S1 level at 1.3712, it will next see support at 1.3601. If the second key support zone is breached, downward movement may extend to 1.3393.

In weekly terms, the central pivot point is at 1.3861. The three key resistance levels are as follows: R1 – 1.4127, R2 – 1.4430, R3 – 1.4696. The three key support levels are: S1 – 1.3558, S2 – 1.3292, S3 – 1.2989.