| Wrap Up |
| The Canadian dollar strengthened against its U.S. counterpart, recovering from an earlier one-week low after evidence the U.S.-China trade war was hurting U.S. manufacturing activity. Canada’s economy was unchanged in July, following four straight months of growth, as the country’s mining, quarrying and oil and gas extraction sectors contracted, Statistics Canada data showed. The U.S. dollar index declined against a basket of major currencies after data showed the U.S. manufacturing sector contracted in September to its weakest level in more than a decade as business conditions worsened amid U.S.-China trade tensions. Canadian government bond prices were higher across a steeper yield curve in sympathy with U.S. Treasuries. The two-year bond rose 8.5 Canadian cents to yield 1.533% and the 10-year bond was up 6 Canadian cents to yield 1.355%. |
| Levels and recommendations |
| Global share index hit its lowest level in a month on fears the fallout from the U.S.-China trade war is spreading to the U.S. economy and could further hurt global growth. The US dollar index steadied, having earlier been knocked off its highest levels in more than two years following data on Tuesday that showed a measure of U.S. manufacturing activity falling to its lowest in more than 10 years. The euro is trading around 1.0945 levels after the US private sector created 135K jobs during last month. Further out, euro is deriving extra support from the shrinking yield spread differential between the US and German bonds, taking the gap to 217 pts. The Canadian dollar is trading weak at 1.3275 levels due to goodish pickup in the US treasury bond yield lending some support to US dollar index. Further movement in the USDCAD pair will largely depend on the outcome of crude oil inventories due today. The USDCAD is expected to trade in the range of 1.3245-1.3290 levels for the day. |