| Wrap Up |
| The Canadian dollar edged lower against its U.S. counterpart, pulling back from a three-week high reached after the Bank of Canada’s interest rate decision, as encouraging U.S. data boosted the greenback. The U.S. dollar pared its decline against a basket of major currencies after data showed that U.S. services sector activity accelerated in August and private employers boosted hiring. The Canadian economy is showing “a welcome degree of resilience” to negative shocks, said Bank of Canada Deputy Governor Lawrence Schembri, one day after the central bank left its benchmark interest rate on hold at 1.75%. Canadian government bond prices were lower across the yield curve, in sympathy with U.S. Treasuries. The two-year bond fell 21 Canadian cents to yield 1.451% and the 10-year bond was down 125 Canadian cents to yield 1.264%. |
| Levels and recommendations |
| Stimulus from China capped a strong week for global share markets, as mixed U.S. jobs data kept bond buyers and dollar dealers on the back foot after the first significant selloffs. Following a rollercoaster week dominated by political drama in Britain and Italy, trade war chatter, global monetary stimulus and Argentina’s imposition of capital controls, traders had been enjoying a brief bout of calm. The British pound eased to $1.23 after Britain’s parliament moved to block a UK departure from the European Union without a transitional agreement. The Canadian dollar is trading stronger at 1.3175 levels after better than expected domestic employment data for the month of August. The probability of no rate cut has gone up from 50% to 70% in its next monetary policy due in October. This coupled with poor US employment data which led to further appreciation in the CAD.. The USDCAD pair is expected to trade in the range of 1.3145-1.32 levels for the day. |