Forex Market: USD/CAD daily trading outlook

Yesterday’s trade saw USD/CAD within the range of 1.3674-1.3861. The pair closed at 1.3704, losing 0.65% on a daily basis. It has been the 16th drop in the past 37 trading days and also the steepest one since February 17th, when the pair depreciated 1.39%. In addition, the daily low has been the lowest level since February 22nd, when a low of 1.3658 was registered.

At 7:32 GMT today USD/CAD was edging up 0.15% for the day to trade at 1.3724. The pair touched a daily high at 1.3735 at 7:20 GMT, undershooting the daily R2 level, and a daily low at 1.3695 during the early phase of the Asian trading session.

Canada’s dollar regained ground against its US counterpart, as crude oil futures recorded a 1.04% surge on Wednesday. February 24th marked the 24th gain in oil prices out of the past 49 trading days. Oil futures for April delivery went up as high as $32.40 per barrel on February 24th and closed at a level of $32.20. As of 7:43 GMT today the commodity was losing 1.34% on a daily basis to trade at $31.77 per barrel, after going down as low as $31.74 earlier. Oil has trimmed its slump to 5.62% 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 February 19th, probably increased to 270 000, according to market expectations, from 262 000 reported in the preceding week. The latter has been the lowest number of claims since the business week ended on November 20th, when 260 000 claims were reported.

The 4-week moving average, an indicator lacking seasonal effects, was 273 250, marking a decrease by 8 000 compared to the preceding weeks unrevised average.

The business week, which ended on February 12th has been the 49th 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 rose further, this would have a moderate bearish effect on the US dollar.

The number of continuing jobless claims probably decreased to the seasonally adjusted 2 260 000 during the business week ended on February 12th from 2 273 000 in the preceding week. The latter represented an increase by 30 000 compared to the revised up number of claims reported in the week ended on January 29th. 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.

Durable Goods Orders

Durable goods orders in the United States probably increased 2.5% in January from a month ago, according to the median forecast by experts, following a revised up 5.0% drop in December. If expectations were met, Januarys rate of increase would be the strongest since October 2015, when orders were up 3.0%.

The value of shipments of manufactured durable goods, up in two of the past three months, decreased 2.2% (or USD 5.4 billion) in December to reach USD 235.8 billion. The value of unfilled orders for manufactured durable goods, down for the first time in three months, fell 0.5% (or USD 5.6 billion) in December to reach USD 1,187.6 billion. At the same time, the value of inventories of manufactured durable goods, up for the first time in the past six months, rose 0.5% (or USD 2.1 billion) during the period to USD 397.9 billion, according to data by the US Census Bureau.

Non-defense new orders for capital goods shrank 15.0% (or USD 11.3 billion) in December to USD 64.4 billion, while defense new orders for capital goods dropped 34.4% (or USD 4.9 billion) during the month to USD 9.3 billion.

Durable goods orders, which exclude transportation, probably rose 0.2% in January from a month ago, according to expectations, following a 1.2% slump in December. The latter has been the most considerable monthly drop since December 2013, when core orders were down at a revised up 1.3%. Large ticket orders, such as automobiles for civil use or aircraft, are not present in the calculation, as their value may be in a wide range. This way the index provides a more reliable information in regard to orders for durable goods.

In case the general index rose at a faster-than-projected pace, this would have a strong bullish effect on the US dollar, due to positive implications in regard to the wider gauge of production, factory orders. The US Census Bureau is scheduled to release the official report 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 – 1.3721
R2 – 1.3738
R3 (range resistance) – 1.3755
R4 (range breakout) – 1.3807

S1 – 1.3687
S2 – 1.3670
S3 (range support) – 1.3653
S4 (range breakout) – 1.3601

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