​VBCE Weekly Foreign Exchange Wrap Up for Aug. 22 – Aug. 26, 2016

Steve Brown, Senior Corporate Trader | Stevebrown@vbce.ca

The CAD was mixed this week losing ground vs. the USD and GBP while gaining

marginally vs. the EUR, JPY, and AUD. Oil prices opened the week near $49 and

dropped to $46.45 on a surprise build in oil and gas inventories before closing the week

near $47.33. USDCAD spent the majority of the week range trading between 1.2900 and

1.2950 as the markets prepared for Friday's speech by the U.S. Fed Chairman. Yellen's

opening comments that "the case for an increase in the federal funds rate has

strengthened in recent months" set in motion the most volatile day in weeks as USDCAD

tested 1.2950 from 1.2862 before falling sharply to a 1 week low of 1.2832. That move

was quickly followed by a reversal higher towards a two week high of 1.3010.

Weekly Open Low High Weekly Close

USDCAD 1.2953 1.2765 1.2973 1.2868

EURCAD 1.4461 1.4432 1.4592 1.4571

GBPCAD 1.6749 1.6612 1.6878 1.6825

JPYCAD 0.01278 0.01274 0.01288 0.01283

AUDCAD 0.9909 0.9762 0.9952 0.9816

Themes for the week:

*USDCAD up-trend breakout - breaks above 1.2935/65 resistance zone and closes week

near two week high of 1.30

*U.S. core durable goods orders: 1.5% (exp. 0.5% / prev. -0.3%)

*U.S. GDP 2nd quarter 2nd reading: 1.1% (exp. 1.1% / prev. 1.2%)

*U.S. Fed Chair Yellen and other voting members offer up hawkish commentary – Sept.

rate hike probability climbs to 38%

On Tap for Next week:

Wednesday, Aug. 31th: Canada GDP ( June): exp. 0.5% (prev. -0.6%)

Friday, Sept. 2: U.S. Non-farm payrolls: exp. 180,000 (prev. 255,000)

U.S. unemployment rate: exp. 4.8% (prev. 4.9%)

Over the past three weeks, USDCAD fell from 1.32 down to 1.2765 during which the

CAD posted a rare 9 day "win" streak. Over the past week, falling oil prices, better than

expected U.S. data, and a hawkish U.S. Fed has translated into a strong performance by

the greenback. From a technical standpoint, failures to hold below the 1.2850 and 1.2892

levels has seen USDCAD break higher and close the week near its highs (1.30). With the

U.S. poised for another round of solid jobs data next week, the market should continue to

push the USD higher in the near term. Expectation – a resumption of the uptrend with

topside targets of 1.3030, 1.2075, 1.3175, and 1.3200.

Downside targets to consider: 1.2965, 1.2892, 1.2832, 1.2790.



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The information and opinions contained herein are gathered from sources which are thought to be reliable but the reader should not assume that the information and opinions are official or final. VBCE makes no warranty concerning the accuracy of the information and opinions, and accepts no liability for the consequences of any actions taken on the basis of the information and opinions provided. The content is for general information only and does not constitute in anyway giving financial advice.