VBCE Weekly Foreign Exchange Wrap Up for Aug. 15 – Aug. 19, 2016
Steve Brown, Senior Corporate Trader | Stevebrown@vbce.ca
The CAD was the best performing currency through Thursday before weaker than
expected retail sales and inflation readings saw the CAD lose ground on Friday. Oil
prices gained another $8 this week for a net 20% gain over the past 7 days. The USD
came under pressure after the release of Wednesday's U.S. Fed meeting minutes.
Although key Fed speakers had boosted the USD earlier that day with some bullish
comments, the Fed minutes revealed that voting members were divided over whether
recent economic data showed that the U.S. economy was strong enough to support a rate
hike. USDCAD fell to a 2 month low of 1.2765 Thursday before climbing to 1.2892 on
Friday. Although the CAD managed to hold gains vs. the AUD and USD, it lost ground
vs. the EUR, GBP, and JPY after Friday's sell-off.
Weekly Open Low High Weekly Close
USDCAD 1.2953 1.2765 1.2973 1.2868
EURCAD 1.4461 1.4432 1.4592 1.4571
GBPCAD 1.6749 1.6612 1.6878 1.6825
JPYCAD 0.01278 0.01274 0.01288 0.01283
AUDCAD 0.9909 0.9762 0.9952 0.9816
Themes for the week:
*USDCAD sees daily closes below 1.2935 and 1.2862 support levels putting pressure on
the downside and testing 2 month low of 1.2765
*Downtrend comes to a halt – after the CAD enjoyed 9 consecutive daily gains vs USD,
it weakened by 1% on Friday
*Strong oil trend continues – now 7 consecutive daily gains (net 20% gain)
*Canadian retail sales disappoint: -0.8% (exp. 0.3% / prev. 0.8%)
*U.S. core CPI m/m: 0.1% (exp. 0.2% / prev. 0.2%) y/y: 2.2% (exp. 2.3% / prev. 2.3%)
*U.S. industrial production beats estimates: 0.7% (exp. 0.3% / prev. 0.4%)
*Canadian core CPI inflation flat m/m: 0% (exp. 0% / prev. 0%) y/y: 2.1% (exp. 2.1% /
prev. 2.1%)
On Tap for Next week:
Thursday, Aug. 25th: U.S. core durable goods orders: exp. 0.5% (prev. -0.4%)
Jackson Hole Economic Symposium (Thurs & Fri)
Friday, Aug. 26th: U.S. GDP Q2 (2nd reading): exp. 1.1% (prev. 1.2%)
U.S. Fed Yellen speech
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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.
