​VBCE Weekly Foreign Exchange Wrap Up for June 19 – June 23, 2017

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

The CAD opened the week on a strong note but was unable to build any positive momentum. The USD enjoyed some broad strength early on and combined with a 6% drop in oil prices, USDCAD climbed towards an 8 session high on Wednesday @ 1.3349. Since the end of May, WTI crude oil has fallen nearly 20% testing 10 month lows near $42. Despite this large sell-off, the USDCAD rate is actually about 2 cents lower over the same time period. Oil prices recovered on Thursday while Canadian retail sales were strong sending USDCAD all the way down to 1.3210. Slightly weaker than expected Canadian inflation data out Friday saw the pairing re-visit the 1.33 level briefly before falling back to 1.3260. Overall, the EUR and the USD were the best performing currencies although there was the trading ranges were minimal given the lack of top tier U.S. economic data.

Weekly Open

Low

High

Weekly Close

USDCAD

1.3212

1.3191

1.3349

1.3265

EURCAD

1.4785

1.4730

1.4890

1.4845

GBPCAD

1.6883

1.6723

1.6960

1.6874

JPYCAD

0.01193

0.01183

0.01200

0.01192

AUDCAD

1.0070

0.9966

1.0095

1.0048

Themes for the week:

*CAD consolidates recent gains – continues to trade near 4 month highs vs. the USD, 3 month highs vs. JPY, and 2 month highs vs. EUR & GBP

*WTI crude drops 6% from $45.03 to $42.15 (lowest since Aug. 2016) before closing week @ $43

*Canada retail sales: 0.8% (exp 0.2% / prev 0.5%) core: 1.5% (exp 0.7% / prev -0.1%)

*Canada CPI m/m: 0.1% (exp 0.2% / prev 0.4%)

*CPI core common: 1.3% (prev 1.3%) trim: 1.2% (prev 1.3%) median: 1.5% (prev 1.6%)

On Tap for Next week:


Tuesday June 27: U.S. durable goods orders: exp -0.6% / prev -0.9%

Thursday June 29: U.S. GDP Q1: exp 1.2% / prev 1.2%

Friday June 30: Canada GDP (April): exp 0.2% / prev 0.5%

Technically, USDCAD is bearish / neutral. After a strong move from 1.3191 up to 1.3349 early in the week, the pairing was unable to sustain gains above the 1.3300 level and dropped back to 1.3210. The pairing will closed the week at 1.3265 and will need to make a sustained break of 1.3210 to increase bearish momentum.

Topside targets to consider: 1.3308, 1.3349, 1.3480, 1.3520

Downside targets to consider: 1.3210, 1.3165, 1.3100, 1.3070

USDCAD 2017 Forecast (Canadian Banks) June 2017

Bank

2017 Q3

2017 Q4

2018 Q1

HSBC

1.35

1.35

N/A

TD Canada Trust

1.3158

1.2987

1.2987

National Bank

1.34

1.30

1.27

RBC

1.39

1.40

1.38

CIBC

1.36

1.34

1.32

BMO

1.3550

1.34

1.3250

Scotia Bank

1.30

1.28

1.28

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

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

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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.