Forex Market: USD/CAD daily trading outlook

Yesterday’s trade saw USD/CAD within the range of 1.2595-1.2685. The pair closed at 1.2612, losing 0.53% on a daily basis. It has been the 40th drop in the past 81 trading days and also the steepest one since April 19th, when the major pair went down 0.89%. The daily low has been an almost exact test of the low from April 20th. USD/CAD has depreciated 2.95% so far during the current month, following two consecutive months of decline.

At 6:44 GMT today USD/CAD was inching up 0.03% on the day to trade at 1.2616. The pair touched a daily high at 1.2634 at 6:10 GMT, undershooting the range resistance level (R3), and a daily low at 1.2597 during early Asian trade.

The loonie tested recent almost 10-month highs, as crude oil futures reached fresh 5.5-month highs on Tuesday. April 26th marked the 50th gain in oil prices out of the past 92 trading days. Oil futures for June delivery went up as high as $44.83 per barrel on April 26th, or the highest price level since November 9th 2015, and closed at $44.53, surging 4.43% compared to Monday’s close. As of 6:54 GMT today the commodity was edging up 0.20% to trade at $44.62, after going up as high as $44.67 per barrel earlier.

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

Fundamentals

United States

Pending Home Sales

The index of pending home sales in the United States probably rose 0.5% in March from a month ago, according to the median estimate by experts. In January pending home sales increased 3.5%, or the most since February 2015, when sales surged at a revised up 3.6%.

In annual terms, the index of pending home sales advanced 0.7% in February, which has been an 18th consecutive period of increase. However, Januarys rate of sales growth has been the slowest since September 2014.

In case pending home sales increased at a slower pace than anticipated, this would have a moderate bearish effect on the US dollar. The National Association of Realtor’s (NAR) will report on the official index performance at 14:00 GMT.

FOMC policy decision

The Federal Open Market Committee (FOMC) will probably keep the target range for the federal funds rate intact between 0.25% and 0.50% at its two-day policy meeting, scheduled to be concluded today, according to the median forecast by experts.

In December 2015 the Committee raised borrowing costs by 25 basis points to the current 0.500% level for the first time in 55 policy meetings.

In March the target range was left intact. Policy makers stressed on the moderate-paced expansion in economic activity, but, however, estimates of US growth and PCE inflation were revised down. Economy is now projected to expand 2.2% in 2016 (down from 2.4% as expected in December), 2.1% in 2017 (down from 2.2% as expected in December) and 2.0% in 2018 (unchanged from Decembers estimate). The Personal Consumption Expenditure Price Index is now projected to rise 1.2% in 2016 (down from a 1.6% surge as expected in December), 1.9% in 2017 (unchanged from December) and 2.0% in 2018 (also unchanged from Decembers estimate).

According to the FOMCs Policy Statement released in March: ”The Committee currently expects that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace and labor market indicators will continue to strengthen. However, global economic and financial developments continue to pose risks. Inflation is expected to remain low in the near term, in part because of earlier declines in energy prices, but to rise to 2 percent over the medium term as the transitory effects of declines in energy and import prices dissipate and the labor market strengthens further”.

The Minutes from the FOMCs meeting on March 15th-16th reiterated concerns over risks coming from global economic and financial developments.

The official rate decision is scheduled at 18:00 GMT.

Daily and Weekly Pivot Levels

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

R1 – 1.2620
R2 – 1.2629
R3 (range resistance) – 1.2637
R4 (range breakout) – 1.2662

S1 – 1.2604
S2 – 1.2595
S3 (range support) – 1.2587
S4 (range breakout) – 1.2563

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

Central Pivot Point – 1.2751
R1 – 1.2911
R2 – 1.3153
R3 – 1.3313

S1 – 1.2509
S2 – 1.2349
S3 – 1.2107