​VBCE Daily Foreign Exchange Update for Wednesday, Oct. 05, 2016

USDCAD spot rate: 1.3180 - 1.3185 (as at 8:37am PST)

Ranges:

Asia:

1.3176

to

1.3198

Europe:

1.3185

to

1.3213

North America:

1.3190

to

1.3211

Technical Support / Resistance:

S2

S1

R1

R2

1.3039

1.3145

1.3251

1.3295

Key Economic Data Releases:

- Canada Trade Balance: -1.94B (exp. -2.60B / prev. -2.19B)

- U.S. ADP employment change: 154k (exp. 166k / prev. 175k)

- U.S. Trade Balance: -40.70B (exp. -2.60B / prev. -2.19B)

- U.S. Non-mfg PMI (Sep): 57.1 (exp. 53.0 / prev. 51.4)

- U.S. Crude oil: -2.976M (exp. 2.56M / prev. 1.882M)

Key Event Calendar:

Date

Canada

U.S.A.

Oct. 6

Oct. 7

Building permits

Employment change, unemployment rate Ivey PMI, Bank of Canada business outlook survey

Non-farm payrolls, unemployment rate, avg hourly earnings

CAD is soft trading at the lower end of its one week range and threatening a break through its 200 day MA. The CAD appears vulnerable and may see considerable downside in the event of a turn in oil prices. Venezuelan Oil Minister Eulogio Del Pino said an agreement to limit production among OPEC & non-OPEC states could add $15 to crude oil prices Chicago Fed President Charles Evens said today that the central bank will probably increase borrowing costs by the end of the year, joining calls this week from Cleveland Fed President Loretta Mester and her counterpart from Richmond, Jeffery Lacker, to raise rates sooner rather than later. Traders are placing odds for a December move at nearly 64%, while the probability of a November hike moved to almost 24% from 21% earlier. Gold holders have been on a good ride this year, as bullion posted its best first half performance in almost 4 decades, but Deutsche Bank Chief Strategist Binky Chadha has commented that he feels gold looks to be 20 to 25% overvalued. In Europe a consensus is building on ending the central bank's bond purchase program-when the time comes-by tapering purchases by 10B EUR a month. The talk of tightening and tapering has spurred a reversal in government bond prices across the world, with US Treasuries dropping while German 10 year bond yields are at -0.03% this morning, up from 0.15% last Friday. Currently, the TSX is up 0.74$ and the Dow is up 0.64%. EURCAD is up 0.01% trading between 1.4767 and 1.4834. GBPCAD is up 0.15% trading between 1.6733 and 1.6848. JPYCAD is down 0.57% trading between 0.01274 and 0.01284. Gold is up 0.06% trading between $1,266 and $1,277USD/oz., silver is down 0.53% trading between $17.67 and $18.00USD/oz., while oil is up 1.26% trading between $49.13 and $49.92.

Sources: Reuters, Bloomberg, FXStreet, RBC Capital Markets, Bank of Canada, U.S. Federal Reserve, CNBC, Forexlive, CME Group

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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.