| Wrap Up |
| The Canadian dollar edged higher against a broadly stronger U.S. counterpart, but kept within its recent trading range ahead of domestic GDP data that could guide expectations for next week’s interest rate decision by the Bank of Canada. The U.S. dollar climbed against a basket of major currencies as news that Washington and Beijing were discussing renewing their negotiations in September eased anxieties about the trade war. Canada’s current account deficit narrowed more than expected to C$6.4 billion in the second quarter from a revised C$16.6 billion in the first quarter, on a lower deficit on goods. Canadian government bond prices were lower across a steeper yield curve in sympathy with US. The two-year bond fell 3 Canadian cents to yield 1.346% and the 10-year bond was down 26 Canadian cents to yield 1.149%. |
| Levels and recommendations |
| Global stocks climbed to a one-week high on cautious hopes for a rapprochement on trade between Beijing and Washington, though a perky dollar capped gains with China’s yuan softening again, on track for its weakest month in 2-1/2 decades. The euro plunged to a one-month low of $1.1033 against the dollar, as investors looked for aggressive easing by the European Central Bank and ignored doubts by some policymakers about the need for more stimulus. The British pound was steady at $1.2200 against the dollar ahead of a crucial few days for parliament next week which could even result in a no-confidence motion and a new election. The Canadian dollar is trading stronger at 1.3260 levels after better than expected domestic GDP data. This has led to hike in probability of no interest rate cut from 32% to 42% in its October monetary policy. On the other hand increase in crude oil prices also provided significant support to CAD. The USDCAD is expected to trade in the range of 1.3252-1.3300 levels for the day. |