VBCE Weekly Foreign Exchange Wrap Up for March 20 - 24, 2017

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

The CAD saw some early strength this past week after strong retail sales saw USDCAD eclipse the prior-week's post U.S. FOMC plunge (1.3275). The move to 1.3263 – the March low - was short-lived with the pairing rebounding back above the 1.33 level. On top of the strong retail sales report, oil enjoyed a brief 3% rise early in the week only to see the gains erased with 5% plunge sending USDCAD up to a 1 week high of 1.3409 on Wednesday. Broad-based USD weakness prevailed for much of the week but further downside moves in USDCAD found support near the 1.3316 level. Canadian inflation data was slightly softer than expected keeping USDCAD anchored near 1.3380 into the weekly close. The JPY was a strong performer hitting 4 month highs against the CAD on a combination of Japanese fiscal year-end repatriation flows and overall market risk aversion flows. The GBP also enjoyed some strength in position squaring ahead of the March 29th triggering of Article 50 (Brexit). The AUD saw strength early in the week as it challenged a 4 year high of 1.0330 against the CAD before succumbing to falling iron ore prices, risk aversion flows, and dovish tones in the central bank minutes.

Weekly Open

Low

High

Weekly Close

USDCAD

1.3361

1.3263

1.3409

1.3379

EURCAD

1.4364

1.4312

1.4480

1.4434

GBPCAD

1.6565

1.6485

1.6731

1.6687

JPYCAD

0.01186

0.01180

0.01209

0.01200

AUDCAD

1.0288

1.0165

1.0330

1.0190

Themes for the week:

*Canada retail sales: 2.2% exp 1.1% / prev -0.4% Core: 1.7% exp 1.1% / prev -0.5%

*U.S. durable goods orders: 1.7% (exp 1.2% / prev 2.3%)

*Canada CPI m/m: 0.2% (exp 0.2% / prev 0.9%) y/y: 2.0% (exp 2.1% / prev 2.1%)

*Oil (WTI) relatively unchanged in a $47.08 to $49.45 range

On Tap for Next week:


Tue Mar. 28: Bank of Canada Poloz speech

Wed Mar 29. UK – triggering Article 50 (Brexit)

Thur Mar. 30: U.S. GDP Q4: exp 2.0% / prev 1.9%

Fri Mar. 31: Canada GDP (Jan): exp 0.3% / prev 0.3%

Technically, USDCAD appears to trading with a neutral bias for the 2nd week in a row. The pairing has failed to sustain trade below the 1.3300 level and has also failed to regain the 1.3420 level. Although the broad USD dollar index continues to remain under pressure this week with falling U.S. yields, the CAD has been unable to sustain gains as generally positive economic data is offset with declining oil prices and risk aversion flows. A sustained break below the 1.33 level / above the 1.3400 level will be needed for a change in technical bias.

Topside targets to consider: 1.3375, 1.3409, 1.3480, 1.3535

Downside targets to consider: 1.3316, 1.3263, 1.3213, 1.3174

USDCAD 2017 Forecast (Canadian Banks) Mar. 2017

Bank

2017 Q2

2017 Q3

2017 Q4

HSBC

1.40

1.35

1.35

TD Canada Trust

1.37

1.36

1.35

National Bank

1.40

1.39

1.37

RBC

1.38

1.38

1.38

CIBC

1.36

1.39

1.38

BMO

1.3470

1.3550

1.3400

Scotia Bank

1.40

1.38

1.36

2016 CAD Summary

2016 Summary

2016 Open

Low

High

2016 Close

USDCAD

1.3840

1.2460

1.4692

1.3429

EURCAD

1.5040

1.3820

1.6106

1.4134

GBPCAD

2.0471

1.5726

2.0925

1.6550

JPYCAD

0.01149

0.01125

0.01335

0.01150

AUDCAD

1.0085

0.9326

1.0398

0.9691

083e3d7a6b

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Disclaimer


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.