Forex Market: USD/CAD daily trading outlook

Yesterday’s trade saw USD/CAD within the range of 1.3690-1.3821. The pair closed at 1.3797, rising 0.66% on a daily basis. It has been the 21st gain in the past 36 trading days and also the steepest one since February 5th. In addition, the daily high has been the highest level since February 19th, when a high of 1.3847 was registered.

At 7:40 GMT today USD/CAD was edging down 0.10% for the day to trade at 1.3783. The pair touched a daily low at 1.3777 at 7:36 GMT, undershooting the daily S2 level, and a daily high at 1.3815 during mid-Asian trade.

Canada’s dollar pared the recent gains against its US counterpart, as crude oil futures recorded a 0.25% dip on Tuesday. February 23rd marked the 26th drop in oil prices out of the past 48 trading days. Oil futures for April delivery went down as low as $31.22 per barrel on February 23rd and closed at a level of $31.40. As of 7:46 GMT today the commodity was edging down 0.32% on a daily basis to trade at $31.30 per barrel, after going down as low as $31.08 earlier. Oil has widened its slump to 6.78% so far during the current month.

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

Fundamentals

United States

Services PMI by Markit – preliminary reading

Activity in the US sector of services probably increased at a faster rate in February from a month ago, with the corresponding preliminary Purchasing Managers Index coming in at a reading of 53.5, according to expectations. In January the services PMI was reported at a final 53.2, falling from a preliminary reading of 53.7. It has been the lowest reading since October 2013, dragged down by lower output and new business orders. The PMI is based on data collected from a representative panel of more than 400 private sector companies, which encompasses industries such as transport and communication, financial intermediaries, business and personal services, computing & IT and hotels & restaurants. Values above the key level of 50.0 indicate optimism (expansion in general activity). In case a faster-than-expected expansion in services sector activity is reported, this would have a moderate bullish effect on the US dollar, as services contribute to a considerable portion of the US GDP. The preliminary reading by Markit Economics is due out at 14:45 GMT.

New Home Sales

Sales of new single-family homes probably decreased 4.4% to the seasonally adjusted annual rate of 520 000 in January, according to market expectations, from 544 000 reported in December. The latter has been the highest sales level since February 2015, when a figure of 545 000 was reported. Sales in the Midwest climbed 31.6% in December, while those in the Northeast were up 20.8%. Additionally, sales in the West surged 21%, while those in the South were 0.4% higher.

The median sales price of new houses sold went up as high as USD 288 900 in December, after being at USD 297 000 in the preceding month. The average sales price went down to USD 346 400 in December from USD 364 200 in November. At the end of the month, the seasonally adjusted estimate of new houses for sale was 237 000, up from 231 000 at the end of November. It represents a supply of 5.2 months at the current sales rate, according to the report by the US Census Bureau.

In case the index showed a worse-than-anticipated performance, this would have a strong bearish effect on the US dollar. The Census Bureau is to report the official figure at 15:00 GMT.

Daily and Weekly Pivot Levels

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

R1 – 1.3809
R2 – 1.3821
R3 (range resistance) – 1.3833
R4 (range breakout) – 1.3869

S1 – 1.3785
S2 – 1.3773
S3 (range support) – 1.3761
S4 (range breakout) – 1.3725

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

Central Pivot Point – 1.3776
R1 – 1.3902
R2 – 1.4039
R3 – 1.4165

S1 – 1.3639
S2 – 1.3513
S3 – 1.3376