​VBCE Weekly Foreign Exchange Wrap Up for Sept. 5 – Sept. 9, 2016

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

The USD was under pressure from Monday through Wednesday as markets changed their tune once again after last Friday's U.S. jobs report miss on whether the U.S. Fed was in a position to raise interest rates. After reaching a 3 week high of 1.3148 last Thursday, USDCAD fell to 1.2828 on Tuesday. Wednesday's Bank of Canada statement was remarkably "dovish" with concerns about export growth and downside risks to economic growth and inflation sending the CAD lower across the board and setting the tone for the balance of the week. Thursday's 5% surge in oil prices ironically did not result in a stronger CAD (there is typically a very strong positive correlation with oil and CAD) while better than expected Canadian jobs data also failed to give the loonie a boost. USDCAD trended higher over the final three days closing near the weekly 1.3053 high. The USD received a boost Thursday as the European Central Bank held steady while hawkish Fed comments on Friday resulted in further USD strength amidst heavy stock market losses.

Weekly Open

Low

High

Weekly Close

USDCAD

1.2993

1.2828

1.3053

1.3047

EURCAD

1.4495

1.4391

1.4658

1.4650

GBPCAD

1.7275

1.7150

1.7314

1.7301

JPYCAD

0.01250

0.01245

0.01272

0.01269

AUDCAD

0.9840

0.9793

0.9946

0.9840

Themes for the week:

*USDCAD post U.S. jobs report slide continues – 4 day slide from previous week high of 1.3148 to 3 week low of 1.2828 (also a 3 week low)

*Bank of Canada interest rate / policy announcement: unchanged @ 0.5% (exp. 0.5% / prev. 0.50%) – USDCAD climbs from 1.2828 up to 1.2914

*European Central Bank interest rate: unchanged at 0% - EUR climbs then plunges

*EIA crude oil inventories: near record draw of 14.5 million barrels (exp. +0.225 m / prev. +2.276m) – Oil prices soar nearly 5%, but ironically USDCAD climbs from 1.2850 up to 1.2940 on the day

*Canada net employment change: 26,200 (exp. 15,000 / prev. -31,200)

*Canada full time jobs change: 52,200 (prev. -71,400)

*Canada unemployment rate: 7.0% (exp. 6.9% / prev. 6.9%) – better than expected data fails to boost CAD / USDCAD climbs from 1.2910 up to 1.3053

*U.S. Fed member Rosengren offers up hawkish stance for interest rate hikes – USD rallies across the board / DJIA falls nearly 400pts

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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.