USDCAD Likely to Remain Bearish if Support Around 1.3000 is Broken

United States – Institute for Supply Management (ISM) Manufacturing PMI

Today, at GMT 3:00 p.m., the Institute for Supply Management will release its manufacturing PMI figure for the United States. The ISM’s US manufacturing PMI measures the level of a diffusion index based on a survey of 400 purchasing managers.

Purchasing managers in the United States are involved in the supply side of the economy. As most companies reduce their expenses and production based on their sales forecast, the survey of purchasing managers reveals the overall optimism of various companies in the country. Hence, binary options traders can easily figure out the sentiment regarding the economic condition in the country from the ISM manufacturing PMI readings.

Last month, the ISM manufacturing PMI for the United States came out at 53.2 and the forecast for this month is currently set at a slightly lower reading, at 53.1.

Canada – Trade Balance

On Friday, at GMT 1:30 p.m., the Statistics Canada will release the monthly trade balance figure, which measures the difference in value between net import and export of goods over the past month.

Since the demand for export is directly correlated with the demand for the Canadian Dollar, binary options investors analyze the monthly trade balance in order to gauge the strength of the CAD against other major currencies.

Last month, the Canadian trade balance figure came out at -3.3 billion and the forecast for August is currently set a slightly better, but still negative, figure compared to July, at -2.6 billion.

Trade Recommendation for the USDCAD

USDCADDaily

Since the start of 2016, the USDCAD has remained in a strong downtrend. However, since May 3, after the USD/CAD broke above the downtrend line, the price mostly remained range bound between 1.2460 and 1.3185.

Last week, the USD/CAD penetrated above the 1.3185, but a lack of bullish momentum pushed the price downwards and it is now trading near the 23.6% Fibonacci retracement level of the last upward swing.

This week, the Canadian trade balance is expected to improve compared to the previous month, which would likely set a bearish fundamental outlook for the USDCAD. Hence, if the USDCAD closes below the 1.3016 level, which is the 23.6% Fibonacci retracement, then there is a good possibility that the price will move towards the intermediate uptrend line formed during the last two months.

Under the circumstances, it would be recommended that binary options traders consider placing a PUT order for the USD/CAD with their binary options brokers as soon as the price and closes below the 1.3000 level on the daily chart, which is the low from last Friday and a Big Round Number (BRN).

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Best Rated Broker for US traders: Finpari

US Regulated Broker: NADEX

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