| Wrap Up |
| The Canadian dollar edged lower against its U.S. counterpart but held near an earlier five-week high as the reduction of some global investment risks weighed on the greenback. The U.S. dollar weakened against a basket of major currencies, pressured by the sapping of safe-haven demand after the announcement of an initial trade deal between the United States and China and an election victory for Britain’s Brexit-backing Conservative Party. The price of oil, one of Canada’s major exports, rose to its highest in nearly three months as investors’ cheered progress in resolving the U.S.-China trade dispute and a decisive general election result in Britain. The two-year bond rose 7 Canadian cents to yield 1.663% and the 10-year bond was up 77 Canadian cents to yield 1.585%. |
| Levels and recommendations |
| Trade-sensitive currencies such as the Australian dollar and Chinese yuan held below 4-month highs as relief following a U.S.-China trade agreement gave way to caution due to lack of details. Sterling remained bolstered by last week’s resounding election win for British Prime Boris Johnson’s Conservative Party, while Norway’s crown rose to its highest in almost three months ahead of this week’s Norwegian central bank meeting. Turkey’s lira declined some 0.6% against the dollar on Monday to its weakest in almost two months, on concerns over ties with the United States and expectations of further central bank rate cuts. The Canadian dollar is trading stronger around 1.3140 levels as broader weakness seen in the US dollar index supported by the prevalent risk-on mood on the back of the latest optimism over the phase one US-China trade deal. Meanwhile strong domestic foreign securities purchase data together with a modest uptick in crude oil prices provided additional support to loonie. The USDCAD pair is trading near important support level of 1.3140 and it is expected to trade in range of 1.3125-1.3175 levels. |