| Wrap Up |
| The Canadian dollar climbed to its strongest in more than two months against a broadly weaker U.S. counterpart but gains for the currency were tempered by an uncertain outlook for Canada’s federal election on Monday. Polls show Prime Minister Justin Trudeau’s Liberals are locked in a tie with the opposition Conservatives and will not capture enough seats for a majority. That could leave them in a weakened position, reliant on smaller parties to govern. Speculators have raised their bullish bets on the Canadian dollar to the highest since mid-September, data from the U.S. Commodity Futures Trading Commission showed. As of Oct. 15, net long positions had increased to 12,961 from 5,313 in the prior week. Canadian government bond prices were higher across a flatter yield curve, with the 10-year bond rising 13 Canadian cents to yield 1.546%. On Thursday, the 10-year yield reached a three-month high intraday at 1.608%. |
| Levels and recommendations |
| Global shares rose as hopes for resolving the U.S.-China trade war and a belief that Britain will avoid a disorderly exit from the European Union gave investors cause for riskier bets. Appetite for riskier assets was also supported as markets judged the chances of a disruptive no-deal Brexit were receding, even after Britain’s parliament delayed a vote on Prime Minister Boris Johnson’s deal to exit the EU. The British pound by Friday risen as much as 6.5% in seven trading days to a five-month high, underscoring market expectations that either a Brexit deal or delay was most likely.Euro zone bond yields also rose on the dwindling risk of a British no-deal exit. The benchmark 10-year German government bond’s yield rose as much as 4 basis points to -0.334%. The Canadian dollar is trading stronger around 1.31 mark due to broader weakness seen in the US dollar index. On the other hand the pair has entered into bearish territory and has an immediate near term support placed at around 1.3050 levels. In absence of any economic data from US and Canada, the pair is likely to trade in the range of 1.3090-1.3120 levels for the day. |