Steve Brown, Senior Corporate Trader | Stevebrown@vbce.ca
Despite opening the week near a 1 week low, USDCAD failed to break below the 1.30
level and traded in a 140 pt. range for most of the week (1.30 – 1.3140) as oil prices fell
6% between Monday and Wednesday AM before rebounding 7% to close the week at
$42. Another test to break the 1.30 level failed on Friday as a wide disparity in U.S. and
Canadian jobs data caused USDCAD to climb 2 cents to a weekly high of 1.3200.
Weekly Open Low High Weekly Close
USDCAD 1.3032 1.2996 1.3200 1.3165
EURCAD 1.4563 1.4445 1.4733 1.4591
GBPCAD 1.7240 1.7052 1.7546 1.7211
JPYCAD 0.01277 0.01270 0.01302 0.01292
AUDCAD 0.9901 0.9835 1.0062 1.0030
Themes for the week:
*Reserve Bank of Australia lowers key interest rate by ¼ point (from 1.75% to 1.50%)
fails to signal any further rate cuts / AUDCAD soars towards parity (6 month high)
*Bank of England lowers key interest rate by ¼ point (from 0.5% to 0.25%) increases
quantitative easing by GBP60 billion to total GBP435 billion / GBPCAD plunges
towards 3 year lows
*USDCAD fails to break 1.30 support / bounces to 1.3200 / retains neutral bias
*Oil prices WTI crude rallies 7% after Wednesday's inventory report indicates large
gasoline draws
*U.S. July payroll tops estimates: +255,000 (exp. 180,000)
*Canada loses 31,200 jobs (exp. +10,000) **111,500 Full time job losses in June & July
*Canadian trade deficit widens to $3.63 billion (vs exp narrow to $2.82 billion)
*U.S. trade deficit widens to $44.51 billion (vs. exp $43.10 billion)
On Tap for Next week:
Friday Aug. 12th: U.S. retail sales: exp. 0.4% (prev. 0.6%)
Technically, USDCAD failed to break below the 1.30 level on several attempts this week
while Friday's rally was contained by 1.3200 offers. USDCAD has been trading with a
neutral bias as of late being pulled in both directions by inconsistent U.S.data (significant
downside miss on Q2 GDP data vs. surprise upside beat on jobs data) With oil prices
rebounding this week after a significantly large draw from gasoline inventories, and little
in the way of key data next week, expect USDCAD to hold a neutral range contained by
1.30 – 1.3246. Downside targets to consider: 1.3120, 1.3037, 1.3000, 1.2932. Top-side
targets to consider: 1.3200, 1.3246, 1.3305
Sources: Reuters, Bloomberg, FXStreet, RBC Capital Markets, Bank of Canada, U.S. Federal Reserve,
CNBC, Forexlive