​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.

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