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Forex Market: USD/CAD daily trading outlook

Yesterday’s trade saw USD/CAD within the range of 1.3224-1.3447. The pair closed at 1.3250, plummeting 1.19% on a daily basis. It has been the 23rd drop in the past 47 trading days and also the sharpest one since February 25th, when the pair fell 1.25%. The daily low has been the lowest level since November 12th 2015, when the pair registered a low of 1.3221. USD/CAD has tumbled 1.93% so far during the current month, following a 3.10% slump in February.

At 7:50 GMT today USD/CAD was edging up 0.15% on the day to trade at 1.3270. The pair touched a daily high at 1.3283 during mid-Asian trade, undershooting the daily R2 level, and a daily low at 1.3237 during the early phase of the Asian trading session.

Canada’s dollar reached fresh 4-month highs against its US counterpart on Wednesday, as crude oil futures advanced to highs unseen since December 9th 2015. March 9th marked the 31st gain in oil prices out of the past 59 trading days. Oil futures for April delivery went up as high as $38.51 per barrel on March 9th and closed at $38.23. As of 7:46 GMT today the commodity was losing 0.65% on a daily basis to trade at $37.98 per barrel, after going down as low as $37.89 earlier. Oil has expanded gains to 12.68% so far during the current month.

On Thursday USD/CAD trading may be influenced by the following events and 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 March 4th, probably fell to 275 000, according to market expectations, from 278 000 reported in the preceding week. The latter has been the highest number of claims since the business week ended on January 29th, when 285 000 claims were reported.

The 4-week moving average, an indicator lacking seasonal effects, was 270 250, marking a decrease by 1 750 compared to the preceding weeks unrevised average.

The business week, which ended on February 26th, has been the 51st consecutive week, when jobless claims stood below the 300 000 threshold, which suggested 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 decreased to the seasonally adjusted 2 255 000 during the business week ended on February 26th from 2 257 000 in the preceding week. The latter represented an increase by 3 000 compared to the revised up number of claims reported in the week ended on February 12th. 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.

Monthly Budget Statement

The United States probably recorded a government budget deficit of USD 200 billion in February, according to market expectations, after a budget surplus of USD 55.16 billion during the previous month. In January 2015 a deficit figure of USD 17.5 billion was reported.

In January total receipts were at USD 314 billion. Individual income taxes contributed to USD 181 billion, social security and other payroll taxes – USD 102 billion, corporate income taxes – USD 7 billion and other taxes and duties – USD 23 billion.

Total outlays amounted to USD 258 billion during January. Social security contributed to USD 50 billion, defense – USD 40 billion, Medicare – USD 44 billion, interest on debt – USD 21 billion and other outlays – USD 104 billion, according to the report by the US Treasury.

The current fiscal year-to-date budget gap amounted to USD 160 billion, or a 17.5% decrease compared to the same period a year earlier.

A larger-than-projected budget deficit in February would have a moderate bearish effect on the greenback. The Financial Management Service is to publish the official figure at 19:00 GMT.

Canada

New Housing Price Index

Selling prices of new homes in Canada probably rose for a 10th straight month in January, up 0.1%, according to market expectations. In December compared to November prices went up another 0.1%. Home values climbed at a rate of 1.6% in December compared to the same month a year ago, while matching the rate of increase reported in November. The New Housing Price Index is a key indicator, reflecting the health of the Canadian housing market. Given the current state of the economy, in case prices surged more than anticipated, this would be an indication of a stronger demand and would, therefore, have a limited bullish effect on the loonie. Statistics Canada will release the official report at 13:30 GMT.

BoC Poloz Statement

At 21:15 GMT Bank of Canada Governor, Stephen Poloz, is expected to take a statement. A moderate-to-high volatility of the pairs containing the Canadian dollar is usually present during such events.

Yesterday the loonie received moderate support, after Bank of Canada kept its benchmark interest rate on hold at 0.50%.

Daily and Weekly Pivot Levels

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

R1 – 1.3270
R2 – 1.3291
R3 (range resistance) – 1.3311
R4 (range breakout) – 1.3373

S1 – 1.3230
S2 – 1.3208
S3 (range support) – 1.3189
S4 (range breakout) – 1.3127

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

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