Forex Market: USD/CAD daily trading outlook

Yesterday’s trade saw USD/CAD within the range of 1.3275-1.3426. The pair closed at 1.3418, surging 1.05% on a daily basis. It has been the 24th gain in the past 46 trading days and also the sharpest one since February 5th, when the pair added 1.18%. The daily high has been the highest level since March 4th, when the pair registered a high of 1.3472. USD/CAD has tumbled 0.86% so far during the current month, following a 3.10% slump in February.

At 7:47 GMT today USD/CAD was inching up 0.03% on the day to trade at 1.3422. The pair touched a daily high at 1.3447 at 4:20 GMT, overshooting the daily R2 level, and a daily low at 1.3403 during the early phase of the Asian trading session.

Canada’s dollar distanced from recent highs against its US counterpart, as crude oil futures retreated sharply from 2-month highs on Tuesday. March 8th marked the 28th drop in oil prices out of the past 58 trading days and also the steepest one since February 16th. Oil futures for April delivery went down as low as $36.12 per barrel on March 8th and closed at $36.48. As of 7:58 GMT today the commodity was gaining 0.52% on a daily basis to trade at $36.67 per barrel, after going up as high as $36.77 earlier. Oil has trimmed gains to 8.41% so far during the current month.

On Wednesday USD/CAD trading may be influenced by the following event listed below.

Fundamentals

Canada

Bank of Canada Policy Decision

Bank of Canada’s (BoC) Governing Council will probably leave the target for the benchmark interest rate (overnight rate) without change at 0.50% at the policy meeting today, according to expectations. At its meeting on July 15th 2015 the central bank cut its benchmark by 0.25% to the current level, citing a lower outlook for growth and higher risks to financial stability. The Bank Rate was reduced to 0.75% from 1.00%, while the Deposit Rate was lowered to 0.25% from 0.50%.

At the January meeting all key rates were left intact, while annual inflation is expected to reach the middle of the target range (2%) by early 2017.

According to excerpts from the BoC Statement from January 20th 2016: ”The dynamics of the global economy are broadly as anticipated in the Bank’s October Monetary Policy Report (MPR), with diverging economic prospects and shifting terms of trade. China continues its transition to a more sustainable growth path and the expansion in the United States is on track, despite temporary weakness in the fourth quarter of 2015.”

”Prices for oil and other commodities have declined further and this represents a setback for the Canadian economy. GDP growth likely stalled in the fourth quarter of 2015, pulled down by temporary softness in the U.S. economy, weaker business investment and several other temporary factors. The Bank now expects the economy’s return to above-potential growth to be delayed until the second quarter of 2016.”

”The Bank projects Canada’s economy will grow by about 1 1/2 per cent in 2016 and 2 1/2 per cent in 2017. The complex nature of the ongoing structural adjustment makes the outlook for demand and potential output highly uncertain. The Bank’s current base case projection shows the output gap closing later than was anticipated in October, around the end of 2017. However, the Bank has not yet incorporated the positive impact of fiscal measures expected in the next federal budget.”

The official policy decision is scheduled to be announced 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 – 1.3432
R2 – 1.3446
R3 (range resistance) – 1.3460
R4 (range breakout) – 1.3501

S1 – 1.3404
S2 – 1.3390
S3 (range support) – 1.3376
S4 (range breakout) – 1.3335

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

Central Pivot Point – 1.3404
R1 – 1.3500
R2 – 1.3684
R3 – 1.3780

S1 – 1.3220
S2 – 1.3124
S3 – 1.2940