VBCE Daily Foreign Exchange Update for Friday, Oct. 17th, 2014

USDCAD spot rate: 1.1230 - 1.1235 (AS AT 8:00AM PST)

RANGES:	Asia:	1.1244	to	1.1271
	Europe:	1.1229	to	1.1263
	North America:	1.1209	to	1.1250

Technical Support / Resistance:

S2	S1	R1	R2
1.1070	1.1209	1.1277	1.1360

Key Economic Data Releases:

-Canadian CPI m/m: 0.1% (as expected) y/y: 2.0% (as expected)

-Bank of Canada CPI core m/m: 0.2% (as expected) y/y: 2.1% (as expected)

-U.S. housing starts: 1.017million (exp. 1.004 million)

-U.S. building permits: 1.018 million (exp. 1.029 million)

-U.S. Michigan consumer sentiment index: 86.4 (exp. 84.1)

Key Event Calendar:

DATE	CANADA	U.S.A.
Oct. 20	Wholesale sales
Oct. 21		Existing home sales
Oct. 22	Bank of Canada int. rate, retail sales	Consumer price index
Oct. 23		Jobless claims, Markit manufacturing
		housing price index, leading indicators
Oct. 24		New home sales

Yesterday, market volatility continued as risk aversion flows remained elevated during the Asian, European, and early North American sessions. USDCAD climbed from 1.1241 up to 1.1360 accordingly with JPYCAD reaching its highest level in 6 months. North American markets quickly erased losses and the TSX closed up nearly 200pts. After reaching a two year low of $79.78, oil bounced back to $83. USDCAD fell from 1.1360 down to 1.1227 and remained near 1.1248 for the balance of the day. One of the catalysts for this turnaround may have been comments from U.S. Fed member James Bullard. He thinks the Fed should delay the ending of QE3 as inflation levels are off target. Also, a Bank of England member mentioned that interest rates in that country could stay lower for longer given the current economic conditions. Overnight, USDCAD climbed to 1.1270 in Asian trade and then declined to 1.1229 in London. Canadian inflation met expectation, and USDCAD dipped to 1.1209 from 1.1248. It appears the steady decline in oil prices since June has not affected prices at the pump significantly and inflation levels remain on target. North American markets continue to gain from yesterday’s turnaround and the JPY is the worst performing currency – down nearly 2.50% from yesterday’s high vs. the CAD. Currently, the TSX and the DJIA are both up by about 1.5%. EURCAD is down 0.50% trading between 1.4327 and 1.4428. GBPCAD is down 0.20% trading between 1.8025 and 1.8138. JPYCAD is down 0.80% trading between 0.01051 and 0.01061. Gold is down 0.64% trading at $1,233USD/oz, silver down 1.10% trading at $17.25USD/oz, while oil is up 1%, trading at $83.44.

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