Yesterday’s trade saw USD/CAD within the range of 1.2953-1.3081. The pair closed at 1.3039, rising 0.33% on a daily basis, while extending gains from Monday. The daily high has been the highest level since October 6th, when a high of 1.3137 was registered.
At 8:52 GMT today USD/CAD was losing 0.29% for the day to trade at 1.2999. The pair overcame the range support level (S3), as it touched a daily low at 1.2981 at 8:05 GMT. The area between 1.2945-1.2970 is where USD/CAD found support on previous occasions, so a break below the current daily low may send the pair down for a test of that area.
Today USD/CAD trading may be influenced by a number of macroeconomic reports as listed below.
Fundamentals
United States
Producer prices
Annual producer prices in the United States probably fell for an eighth month in a row in September, by 0.7%, according to the median estimate by experts. If so, it would be the lowest annual drop since June. In August the annualized Producer Price Index decreased 0.8%. 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 logic behind this indicator is that in case 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. In case annual producer prices fell at a lesser rate than anticipated, this would usually have a moderate bullish effect on the US dollar.
The nation’s annualized core producer price inflation, which excludes prices of volatile categories such as food and energy, probably accelerated to 1.2% in September from 0.9% in the prior month. If so, this would be the most considerable annual surge in the core PPI since January 2015, when the index rose 1.6%. The Bureau of Labor Statistics is expected to report on the official PPI performance at 12:30 GMT.
Retail sales
Retail sales in the United States probably rose 0.2% in September on a monthly basis, according to the median forecast by experts. In August sales were up another 0.2%, while the July performance was revised up to a 0.7% increase from a 0.6% gain previously.
Among the 13 major categories, 10 registered growth, while 3 showed declines. In August, the largest increases were reported for miscellaneous store retailers (0.9%), health and personal care stores (0.8%), motor vehicle and parts dealers (0.7%), food and beverages stores (0.7%), food services and drinking places (0.7%), clothing and accessories stores (0.4%) and general merchandise stores (0.4%). On the other hand, the largest decline in sales during the same month was recorded for gasoline stations and building material and garden equipment and supplies dealers (-1.8% each), followed by sales at furniture stores (-0.9%), according to the report by the US Census Bureau.
Annualized retail sales surged 2.2% in August, following a 2.6% climb in July. The latter has been the fastest rate of increase since January 2015, when a 3.7% increase was reported.
US core retail sales, or retail sales ex autos, probably went down 0.1% in September compared to a month ago. If so, this would be the first monthly drop since June. In August core sales increased 0.1%. This indicator removes large ticket prices and historical seasonality of automobile sales.
The report on retail sales reflects the dollar value of merchandise sold within the retail trade by taking a sampling of companies, operating in the sector of selling physical end products to consumers. The retail sales report encompasses both fixed point-of-sale businesses and non-store retailers, such as mail catalogs and vending machines. The Census Bureau, which is a part of the Department of Commerce, surveys about 5 000 companies of all sizes, from huge retailers such as Wal-Mart to independent small family firms.
The retail sales index is considered as a coincident indicator, thus, it reflects the current state of the economy. It is also considered a pre-inflationary indicator, which investors can use in order to reassess the probability of an interest rate hike or cut by the Federal Reserve Bank. In addition, this indicator provides key information regarding consumer spending trends. Consumer expenditures, on the other hand, account for almost two-thirds of the US Gross Domestic Product. Therefore, a larger-than-expected rate of increase in sales would have a strong bullish effect on the US dollar. The official report is due out at 12:30 GMT.
Federal Reserves Beige Book
At 18:00 GMT the Federal Reserve Bank is to release its ”Beige Book” report, which is published eight times during the year. Each of the banks in the 12 Federal Reserve Districts gathers data in regard to current economic situation in the country on the basis of interviews with key business contacts, economists, market experts, and other sources. In case the Beige Book presents an optimistic economic outlook, this will usually support the greenback, while a pessimistic view will have a bearish effect on the currency.
Daily and Weekly Pivot Levels
By employing the Camarilla calculation method, the daily pivot levels for USD/CAD are presented as follows:
R1 – 1.3051
R2 – 1.3062
R3 (range resistance) – 1.3074
R4 (range breakout) – 1.3109
S1 – 1.3027
S2 – 1.3016
S3 (range support) – 1.3004
S4 (range breakout) – 1.2969
By using the traditional method of calculation, the weekly pivot levels for USD/CAD are presented as follows:
Central Pivot Point – 1.3005
R1 – 1.3114
R2 – 1.3284
R3 – 1.3393
S1 – 1.2835
S2 – 1.2726
S3 – 1.2556
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