| Wrap Up |
| The Canadian dollar extended its losses, falling to a near seven-week low against its U.S. counterpart on Wednesday, as oil prices dropped and rising trade tensions worried investors. The price of oil, one of Canada’s major exports, tumbled more than 4%, extending recent heavy losses following a surprise build in U.S. crude stockpiles and fears that demand will shrink due to Washington’s trade war with Beijing. The downward move of the loonie came despite a pickup in the pace of purchasing activity in Canada in July, according to Ivey Purchasing Managers Index data. Canadian government bond prices were higher across the yield curve in sympathy with U.S. Treasuries. The 2-year bond rose 7 Canadian cents to yield 1.315% and the 10-year bond was up 49 Canadian cents to yield 1.188%. |
| Levels and recommendations |
| Stock markets enjoyed a tentative recovery after better-than-expected Chinese export data, while a steadying of the yuan restored some calm to global markets following a stormy few days that sent investors scrambling for safety. The Japanese yen rose again, gaining 0.2% to 106.08 yen per dollar, although it remains off its weekly high of 105.5. The yen tends to gain at times of uncertainty, and its rise this week underlined investors’ fears. The Philippines became the latest country to cut interest rates, following aggressive moves by New Zealand, India & Thailand that had surprised markets by cutting interest rates. The Canadian dollar is trading stronger below 1.33 mark after an uptick in crude oil prices following an upbeat trade data from China mitigated fears over a dismal energy demand outlook in the world’s second oil consumer and helped loonie limit its losses. Saudi Arabia said that it output will be 700,000 barrels per day less than August which further supported crude oil prices. The USDCAD pair is likely to trade in range of 1.3250-1.3325 levels. |