New Retail Summer Hours! Effective June 2, 2018 South Granville & Richmond Branches - Monday - Friday 9am-5pm; Saturdays 9:30am - 4:30pm | Downtown Monday - Friday 8:30am - 5pm.
×

VBCE Weekly Foreign Exchange Wrap Up for Dec 11 - 15, 2017

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

The AUD was the best performing currency this week while the GBP lagged behind. The CAD was mixed gaining vs the EUR and the GBP while losing ground to the JPY and AUD. USDCAD was virtually unchanged this week although Thursday's session was extremely volatile with hawkish comments from Bank of Canada's Poloz sending USDCAD from 1.2860 down to 1.2713. The move lower was short-lived with USDCAD rebounding up to weekly highs Friday morning. The U.S. Fed raised interest rates as was widely expected and indicated another 3 rate hikes to follow in 2018. The USD broadly weakened after the announcement and the economic projections were released although the weakness was limited with the USD recovering during Friday's session. The EUR and the GBP were the worst performing currencies as interest rates were left unchanged by the ECB and the BOE.

Weekly Open

Low

High

Weekly Close

USDCAD

1.2845

1.2713

1.2893

1.2858

EURCAD

1.5120

1.5000

1.5215

1.5084

GBPCAD

1.7220

1.7081

1.7288

1.7120

JPYCAD

0.01132

0.01131

0.01144

0.01141

AUDCAD

0.9650

0.9645

0.9858

0.9825

Themes for the week:

*The AUD & JPY lead while the EUR & GBP lag

*USDCAD holds near 5 month highs, EURCAD near 22 month highs, GBPCAD near 6 month highs, JPYCAD and AUDCAD both near 3 month highs

*WTI crude oil unchanged near 2.5 year highs ($56.10 - $58.50 range)

*UK CPI y/y: 3.1% (exp 3.0% / prev 3.0%)

*UK unemployment rate: 4.3% (exp 4.2% / prev 4.3%)

*U.S. core CPI m/m: 0.1% (exp 0.2% / prev 0.2%) y/y: 1.7% (exp 1.8% / prev 1.8%)

*U.S. Fed interest rate decision: 1.50% (exp 1.50% / prev 1.25%)

*Australia net employment change: 61,600 (exp 19,200 / prev 7,800)

*UK retail sales: 1.1% (exp 0.4% / prev 0.5%)

*Bank of England interest rate decision: 0.50% (exp 0.50% / prev 0.50%)

*European Central Bank interest rate: 0% (exp 0% / prev 0%)

*U.S. core retail sales: 1.0% (exp 0.7% / prev 0.4%)

*Bank of Canada Poloz hawkish comments – sends CAD sharply higher

*Canada manufacturing sales: -0.4% (exp 0.8% / prev 0.4%)

*U.S. industrial production: 0.2% (exp 0.2% / prev 1.2%)

On Tap for Next week:


Thur Dec 21: Bank of Japan interest rate: exp -0.1% / prev -0.1%)

U.S. GDP (Q3): exp 3.3% / prev 3.3%

Canada CPI m/m: exp 0.2% / prev 0.1% y/y: exp 2.0% / prev 1.4%

Canada retail sales: exp 0.3% / prev 0.1%

Fri Dec 22: Canada GDP (Oct.): exp 0.2% / prev 0.2%

Technically, USDCAD is neutral. After several tests in the upper 1.28 range, USDCAD dropped to 1.2713 on hawkish comments from Bank of Canada Governor Thursday only to later recover and post a new weekly high of 1.2893 on Friday. The pairing continues to struggle to attain the 1.2900 level. A sustained break below 1.2620 or above 1.2920 will be required for a change in trend.

Topside targets to consider: 1.2880, 1.2908, 1.2916, 1.2970

Downside targets to consider: 1.2840, 1.2740, 1.2670, 1.2620

USDCAD 2017/2018 Forecast

Bank

2017 Q4

2018 Q1

2018 Q2

2018 Q3

TDCanada Trust

1.25

1.24

1.23

1.24

National Bank

1.25

1.24

1.27

1.28

RBC

1.27

1.33

1.30

1.27

CIBC

1.28

1.33

1.30

1.32

BMO

1.2810

1.2990

1.3060

1.3050

Scotia Bank

1.28

1.28

1.27

1.26

2017 CAD Summary

2017Summary

2017Open

Low

High

2017 Last

USDCAD

1.3450

1.2060

1.3787

1.2870

EURCAD

1.4158

1.3788

1.5371

1.5240

GBPCAD

1.6590

1.5736

1.7849

1.7232

JPYCAD

0.01150

0.01091

0.01240

0.01139

AUDCAD

0.9708

0.9615

1.0343

0.9855

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

083e3d7a6b

Follow us




Follow us on Twitter @vbcefx


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.