| Wrap Up |
| The Canadian dollar was little changed against its U.S. counterpart, holding near an earlier eight-month high which was notched after a number of recent data releases pointed to a pickup in the domestic economy. Money markets see about a 20% chance of an interest rate cut this year from the Bank of Canada, down from about 50% two weeks ago. The central bank will next week make an interest rate decision and revise its growth forecasts for the economy. The loonie notched an eight-month high even as the price of oil, one of Canada’s major exports, was weighed down by data showing a smaller-than-expected draw on U.S. crude stockpiles along with worries about the global economy. Canadian government bond prices were lower across a flatter yield curve, with 2-year bond down 4 Canadian cents to yield 1.520% and 10-year bond falling 10 Canadian cents to yield 1.466%. |
| Levels and recommendations |
| Global stocks lingered near their 17-month highs and bonds paused after this week’s rally after U.S. jobs data, a gauge that could stoke or temper market expectations about aggressive policy easing by the Federal Reserve. The Fed would not be alone in embarking on easier monetary policy. Prospects of global easing have sent government bond yields to multi-year lows around the world. The euro is trading below 1.1240 levels after German data showed industrial orders had fallen far more than expected in May, and a warning from the economy ministry this sector of Europe’s largest economy was likely to remain weak in the coming months. The Canadian dollar is trading above 1.31 mark on muted domestic unemployment data and better than expected US nonfarm payroll data which surpass the market expectation. The crude oil prices headed south as Saudi Arabia oil output rises in the month of May which capped the upside for CAD. The USDCAD pair has reversed from its long-term support of 1.3070 and its moving towards it immediate resistance of 1.3145. |