Wrap Up
The Canadian dollar weakened to a more-than five-week low against the greenback , as comments by the Federal Reserve that were seen by some investors as hawkish offset domestic data showing stronger-than-expected economic growth.
The U.S. dollar index gained against a basket of currencies after the Fed cut interest rates by 25 basis points as expected, its first ease in more than a decade.
The downward move in the loonie came despite data showing the Canadian economy grew 0.2% in May, beating estimates for 0.1% growth, thanks to a rebound in manufacturing.
Canadian government bond prices were mixed across a flatter yield curve in sympathy with U.S. Treasuries. The twoyear bond fell 4.5 Canadian cents to yield 1.556% and the 10year bond was up 7 Canadian cents to yield 1.486%.
Levels and recommendations
The US dollar index charged to its highest in more than two years, trampling almost everything in its way, after the Federal Reserve dampened hopes for a lengthy run of U.S. interest rate cuts.
A blizzard of data and events made for a hectic day as U.S.-China trade talks wound up without any real progress, factory activity contracted again across Asia and Europe and the Bank of England kept UK rates steady at 0.75% as expected.
The British pound dropped below $1.21 mark as the Bank of England left interest rates unchanged and cut its inflation forecast amid plenty of interesting discussion.
The Canadian dollar is trading weaker near 1.3210 levels due to broader strength seen in the US dollar index after Fed chair Jerome Powell described Wednesday’s rate cut as a mid-cycle adjustment of policy. A sharp pullback in crude oil prices due to lack of commitment of future rate cuts further underpinned demand for loonie. The USDCAD pair has an immediate resistance at 1.3225 levels and is likely to trade in the range of 1.3175-1.3250 levels for the day.