| Wrap Up |
| The Canadian dollar weakened to a six-week low against its U.S. counterpart as oil prices slumped, pressured by the prospect of additional U.S. tariffs on Chinese goods. In a series of tweets, U.S. President Donald Trump said he would slap 10% tariffs on $300 billion of Chinese imports starting September 1. The loonie lost ground despite data showing that Canadian manufacturing activity expanded for the first time in four months in July. The IHS Markit Canada Manufacturing Purchasing Managers’ index (PMI) rose to a seasonally adjusted 50.2 last month from 49.2 in June. Canadian government bond prices were higher across the yield curve, with the 2-year bond up 13 Canadian cents to yield 1.479% and the 10-year bond rising 74 Canadian cents to yield 1.399%. |
| Levels and recommendations |
| The US dollar index stays under pressure and is trading flat at 98.20 levels following a mix of payrolls data and increasing trade concerns after Trump announced further tariffs on China. The euro is trading around 1.1100 mark as the US dollar gains ground after the US Non-Farm Payrolls met expectations with 164K but wages beat projections with 0.3% MoM. The aussie is trading below 0.68 mark after South China Morning Post (SCMP) news report, citing Chinese foreign ministry spokesman Hua Chunying, that the new US tariffs violated the agreement the sides had reached this week’s high-level talks and that China will not accept any form of pressure. The Canadian dollar is trading weaker at 1.3240 levels after better than expected US non-farm payroll data and a positive wage growth rate offered some respite to the US dollar. Meanwhile, a better than expected domestic trade balance data along with a strong rebound in crude oil prices did little to lend any significant support to loonie. The USDCAD pair is likely to trade in range of 1.3225-1.3275 levels for the day. |