Forex Market: USD/CAD daily trading outlook

Yesterday’s trade saw USD/CAD within the range of 1.4470-1.4692. The pair closed at 1.4471, losing 0.74% on a daily basis. It has been the first drop in the past 13 trading days. The daily high has been the highest level since April 9th 2003, when a high of 1.4708 was registered.

At 9:33 GMT today USD/CAD was gaining 0.07% for the day to trade at 1.4482. The pair touched a daily low at 1.4450 during the early phase of the Asian trading session, overshooting the daily S1 level, and a daily high at 1.4541 at 7:40 GMT. Support may be received in the area around the low from January 19th (1.4427) and then – at the hourly 200-period EMA (1.4406). Resistance, on the other hand, may be expected at the psychological 1.4500 level and then – at the hourly 55-period EMA (1.4531).

The Canadian dollar has recently been strongly pressured by a persistent decline in prices of crude oil. The commodity has fallen in 14 out of the past 24 trading days. Oil futures for March delivery were down 1.56% on the day to trade at $28.11 per barrel as of 9:42 GMT, after going down as low as $27.88 earlier. On January 20th the commodity touched a low of $27.57 per barrel, or a level unseen since late September 2003. Oil has slumped 24.23% so far during the current month.

On Thursday USD/CAD trading may be influenced by the following macroeconomic reports as listed below.

Fundamentals

United States

Initial, Continuing Jobless Claims

The number of people in the United States, who filed for unemployment assistance for the first time during the business week ended on January 15th, probably dropped to 278 000, according to market expectations, from 284 000 reported in the preceding week.

The 4-week moving average, an indicator lacking seasonal effects, was 278 750, marking an increase by 3 000 compared to the preceding weeks unrevised average.

The business week, which ended on January 8th has been the 44th consecutive week, when jobless claims stood below the 300 000 threshold, which implied a healthy labor market.

Initial jobless claims number is a short-term indicator, reflecting lay-offs in the country. In case the number of claims met expectations or decreased further, this would have a moderate bullish effect on the US dollar.

The number of continuing jobless claims probably fell to the seasonally adjusted 2 248 000 during the business week ended on January 8th from 2 263 000 in the preceding week. The latter has been the highest number of claims since the business week ended on August 15th 2015. The figure also represented an increase by 29 000 compared to the revised up number of claims reported in the week ended on December 25th. 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 13:30 GMT.

Philadelphia Fed Manufacturing Survey

The Philadelphia Fed Manufacturing Index probably remained in negative territory for a second consecutive month in January, coming in at a reading of -3.0, according to the median forecast by experts. In December the gauge plunged to -5.9, or the lowest since August 2015, when it was reported at -6.0. The index is based on a monthly business survey (the Business Outlook Survey), measuring manufacturing activity in the third district of the Federal Reserve, Philadelphia. Participants give their opinion about the direction of business changes in overall economy and different indicators of activity in their companies, such as employment, working hours, new and existing orders, deliveries, inventories, delivery time, price etc. The survey is conducted every month since May 1968. The results are presented as the difference between the percentages of positive and negative projections. A level above zero is indicative of improving conditions, while a level below zero is indicative of worsening conditions. Higher-than-expected index readings would usually have a moderate bullish effect on the greenback. The Federal Reserve Bank of Philadelphia is expected to release the official results from the survey at 13:30 GMT.

Daily and Weekly Pivot Levels

By employing the Camarilla calculation method, the daily pivot levels for USD/CAD are presented as follows:

R1 – 1.4491
R2 – 1.4512
R3 (range resistance) – 1.4532
R4 (range breakout) – 1.4593

S1 – 1.4451
S2 – 1.4430
S3 (range support) – 1.4410
S4 (range breakout) – 1.4349

By using the traditional method of calculation, the weekly pivot levels for USD/CAD are presented as follows:

Central Pivot Point – 1.4385
R1 – 1.4709
R2 – 1.4877
R3 – 1.5201

S1 – 1.4217
S2 – 1.3893
S3 – 1.3725