VBCE Weekly Foreign Exchange Wrap Up for March 27 - 31, 2017

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

The CAD saw some weakness early in the week as oil prices tested 4 month lows near $47. USDCAD climbed from recent range lows near 1.33 to test the 1.34 level on Monday, Tuesday, and Wednesday. With oil prices failing to break below the $47 level, prices turned higher by about 7% sending USDCAD down to 1.3275. In familiar fashion, the move below 1.33 could not be sustained and the pairing bounced to 1.3368. Despite strong Canadian GDP out Friday, another downside test failed at 1.3290 as USDCAD rebounded to close the week near 1.3322. The EURO was the worst performing currency last week due to several weaker than expected inflation readings. The JPY was the best performing currency on risk aversion flows with JPYCAD testing 4 month highs for the 2nd week in a row. The GBP was well bid ahead of Wednesday's announcement of Article 50 (Brexit) with GBPCAD spiking towards 4 month highs near 1.69 although the pairing fell back after the announcement to finish the week relatively unchanged.

Weekly Open

Low

High

Weekly Close

USDCAD

1.3378

1.3275

1.3414

1.3322

EURCAD

1.4446

1.4170

1.4591

1.4170

GBPCAD

1.6683

1.6544

1.6881

1.6688

JPYCAD

0.01173

0.01165

0.01214

0.01194

AUDCAD

1.0200

1.0153

1.0251

1.0160

Themes for the week:

*USDCAD trendless for third straight week – failures below 1.33 / above 1.34

*Oil bounces from 4 month lows – gains 7% towards $50.44

*U.K. triggers Article 50 – Brexit: GBPCAD climbs towards 4 month high (1.69) ahead of the announcement before falling to 1.6544 / closes week unchanged

*U.S. GDP (Q4): 2.1% exp 2.0% / prev 1.9%

*Canada GDP (Jan): 0.6% (exp 0.3% / prev 0.3%)

On Tap for Next week:


Tue Apr. 4: Australian Central Bank interest rate: exp unchanged @ 1.50%

Canada trade balance: exp $0.50 billion / prev $0.81 billion

U.S. trade balance: exp -$44.8 billion / prev -$48.5 billion

Wed Apr. 5: ADP employment change: exp 187,000 / prev 298,000

Fri Apr. 7: Canada net employment change: 5,000 / prev 15,300

Canada unemployment rate: exp 6.7% / prev 6.6%

U.S. non-farm payrolls: exp 180,000 / prev 235,000

U.S. unemployment rate: exp 4.7% / prev 4.7%

Technically, USDCAD appears to trading with a neutral bias for the 3rd straight week. The pairing continues to find support in the 1.3275 – 1.3320 area while sellers emerge in the 1.3380 – 1.3420 area. 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, 1.3400, 1.3480, 1.3535

Downside targets to consider: 1.3300, 1.3280, 1.3260, 1.3213

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.