VBCE Weekly FX Wrap Up for Aug 8th - 12th

VBCE Weekly Foreign Exchange Wrap Up for Aug. 8 – Aug. 12, 2016

Despite opening the week near a 4 month high, USDCAD failed to break above the 1.32 level despite a 5% fall in oil prices Mon – Wed. A sharp 8.5% rebound in oil prices Thurs / Fri saw the 1.30 support level collapse while further USD weakness from poor retail sales and inflation data saw USDCAD test the 1.2930 level.

Weekly Open



Weekly Close


























Themes for the week:

*USDCAD fails to break 1.32 resistance / falls through 1.30 support

*Saudi Oil Minister sparks oil rally on comments – will work with other oil producers to stabilize prices

*Oil prices (WTI crude) rallies 8.5% Thurs - Fri after falling 5% Mon – Wed

*1.055 million barrel build in crude oil inventories vs. expected draw of 1.025 million *Another larger draw from gasoline inventories: -2.8 million vs. exp. -1.06 million *U.S. July retail sales miss estimates but June revised higher (0% vs. exp. 0.4% / prev. 0.8%)

*U.S. producer price inflation misses estimates: -0.4% (vs. exp 0.1%/prev. 0.5%)

On Tap for Next week:

Tues Aug. 16th: U.S. CPI m/m: exp. 0.1% (prev. 0.2%) y/y: 0.9% (prev. 1.0%) U.S. Industrial production: exp. 0.3% (prev. 0.6%)

Wed Aug. 17TH: U.S. FOMC meeting minutes

Friday Aug. 19TH: Canada core retail sales: 0.4% (prev. 0.9%)

Canada CPI m/m: -0.1% (prev. 0.2%) y/y: 1.3% (prev. 1.5%)

Technically, over the past few weeks, CAD closing levels have had little bearing on the trend for the upcoming week. USDCAD has completely reversed its trend on both occasions over the past two weeks ultimately holding within a fairly neutral range.

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USDCAD failed to re-test the 1.32 level despite a strong close last week after Canada's dismal employment report while a close below the 1.30 support level opens the door for further downside tests. The CAD closed near its strongest level of the week vs most currencies on Friday assisted by strong oil gains. If the oil rally can not be sustained, USDCAD could easily reverse and challenge the upper end of its recent 1.2930 – 1.3246 range. The soft retail sales and inflation data out of the U.S. could give the Fed a reason to delay its next rate hike although CPI data due out Tuesday will be closely watched. The CAD may fall under pressure from a continued weakening trend in retail sales and inflation data (due out Friday). Expect USDCAD to hold a neutral range contained by 1.2865 – 1.3188.

Downside targets to consider: 1.2932, 1.2862, 1.2830. Top-side targets to consider: 1.3000, 1.3080, 1.3180


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