VBCE Daily Foreign Exchange Update for Wednesday, Oct. 15th, 2014

USDCAD spot rate: 1.1290 - 1.1295 (AS AT 8:45AM PST)

RANGES:	Asia:	1.1290	to	1.1345
	Europe:	1.1326	to	1.1375
	North America:	1.1227	to	1.1385

Technical Support / Resistance:

S2	S1	R1	R2
1.1070	1.1227	1.1385	1.1439

Key Economic Data Releases:

-U.S. retail sales: -0.3% (exp. -0.1%) ex autos: -0.2% (exp. 0.3%)

-U.S. producer price index m/m: -0.1% (exp. 0.1%) y/y: 1.6% (exp. 1.8%)

-U.S. PPI ex food & energy m/m: 0% (exp. 0.1%) y/y: 1.6% (exp. 1.8%)

-U.S. NY Empire State manufacturing survey: 6.17 (exp. 20.50)

-U.S. business inventories: 0.2% (exp. 0.4%)

Key Event Calendar:

DATE	CANADA	U.S.A.
Oct. 16	Manufacturing shipments	Jobless claims, industrial production
Oct. 17	Consumer price index	Housing starts, building permits, consumer
		sentiment index

Yesterday, USDCAD traded from 1.1190 up to 1.1313 on broad-based USD strength and risk aversion flows. This is the highest level in 5 years. The break above the 2014 high of 1.1277 is technically bullish for the pairing with little resistance beyond this level. The pairing continued higher overnight and peaked this morning at 1.1385. U.S. data was surprisingly disappointing and a massive USD ensued. USDCAD dropped from 1.1385 down to 1.1227 – the break aback below the 1.1277 level now bearish for the USDCAD. The move was short-lived and USDCAD climbed right back to 1.1329. This break back above 1.1300 has also been short-lived with USDCAD falling back to 1.1290. Other notable moves: EURUSD climbed from 1.2625 up to 1.2886 before falling back to 1.2780. USDJPY fell from 107.50 down to 105.20 before bouncing to 106.45. The 10 year yield on U.S. treasuries has fallen significantly over the past month – from about 2.60% down to 1.85%. The Fed funds futures market has a 14% probability of the Fed rate at 0.50% by July of 2015. The probability was 53% last month. Currently, the TSX and the DJIA are down 1% and 1.26% respectively. EURCAD is up 1% trading between 1.4284 and 1.4469. GBPCAD is up 0.50% trading between 1.7956 and 1.8130. JPYCAD is up 1% trading between 0.01053 and 0.01067 Gold is up 0.46% trading at $1,240USD/oz, silver is up 0.75% trading at $17.54USD/oz, while oil is unchanged, trading at $81.89.

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

Please contact the VBCE trading desk at 604-685-1016 for more information on our corporate foreign exchange and wire payment services. Updates by stevebrown@vbce.ca