| Wrap Up |
| The Canadian dollar was little changed against its U.S. counterpart on Friday, with the currency recovering from an earlier six-week low which it hit as trade tensions escalated and after domestic data showed a drop in exports. Canada posted a narrower trade surplus in June as exports fell by 5.1%. It was the first drop for exports since February and reversed a big increase in May. The loonie’s recovery from Friday’s low came as data showing a slower pace of U.S. employment growth and the U.S.-China trade tensions fueled expectations that the Federal Reserve would cut interest rates again in September, pressuring the U.S. dollar. Canadian government bond prices were higher across the yield curve, with the 2-year bond up 3.5 Canadian cents to yield 1.459% and the 10-year bond rising 20 Canadian cents to yield 1.376%. |
| Levels and recommendations |
| Stock markets turned higher as China stabilized its currency after allowing it to depreciate against the dollar in response to President Donald Trump’s decision to put more tariffs on Chinese goods. The fall in the yuan below the politically sensitive level of 7 to the dollar followed Trump’s threat of tariff hikes on an additional $300 billion of Chinese imports and led to Monday’s rout. The fallout of the latest trade war jitters weren’t just felt in stocks. Gold, for example, hit a six-year high as investors sought it out as a supposed safe haven of value. The Canadian dollar is trading flat at 1.3225 levels after broader strength seen in the US dollar index. A goodish rebound in US treasury bond yields amid some sign of stability in the global financial markets underpinned the US dollar demand. The pullback in crude oil prices from day’s high dented demand for loonie. The USDCAD pair sees some fresh supply at higher levels and is expected to trade in the range 1.3175-1.3250 levels for the day in absence of any major economic release. |