| Wrap Up |
| The Canadian dollar posted its biggest gain in seven months against the greenback on lowered expectations for a Bank of Canada interest rate cut in October after the central bank’s policy decision made no mention of future moves. The bank held its benchmark interest rate at 1.75% as expected but said the escalating U.S.-China trade war was doing more damage to the global economy than it had forecast in July. Gains for the loonie came as the price of oil, one of Canada’s major exports, was boosted by a wider market pickup on positive news from China’s services sector, after three days of losses. Canadian government bond prices fell across the yield curve, with the two-year bond down 3.5 Canadian cents to yield 1.334% and the 10-year bond falling 13 Canadian cents to yield 1.128%. The gap between Canada’s 2-year yield and its U.S. equivalent narrowed by 4.2 basis points to a spread of -10.4 basis points. |
| Levels and recommendations |
| Global shares rose to fresh one-month highs and safe-haven assets like gold and the yen fell after U.S.-China talks were flagged for October, raising hopes their trade war will de-escalate before it further damages the world economy. The euro eases from top and it is currently trading at 1.1060 levels after stronger US ADP report, showing that the private-sector employers added 195K jobs in August as against 149K expected. The British pound is trading above 1.23 levels on growing Brexit optimism. The bill to block a no-deal Brexit passed the House of Commons. PM’s brother Jo Johnson quit and elections will be debated on Monday. The Canadian dollar is trading flat at 1.3232 after strong appreciation yesterday post BoC decision on interest rate and not so dovish policy statement. The upside in CAD is capped post strong US manufacturing and employment data. The USDCAD is expected to trade in the range of 1.3225-1.3275 levels for the day. |