​VBCE Weekly Foreign Exchange Wrap Up for Aug. 1 – Aug. 5, 2016

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