| Wrap Up |
| The Canadian dollar strengthened against its U.S. counterpart, recovering from a seven-week low it hit the previous day, as the stronger Chinese currency boosted global risk appetite. Risk sentiment stabilized after resilient Chinese trade data and Beijing’s efforts to slow a slide in the value of the yuan currency encouraged investors to buy riskier currencies. The rise of the loonie came as the price of oil, one of Canada’s major exports, jumped on expectations that falling prices could lead to production cuts, coupled with a steadying of the yuan after a week of turmoil spurred by an escalation in U.S.-China trade tensions. Canadian government bond prices were higher across the yield curve, with the 2-year bond up 0.5 Canadian cent to yield 1.358% and the 10-year bond rising 7 Canadian cents to yield 1.236%. |
| Levels and recommendations |
| Signs of further escalation of the trade war between the United States and China and weak economic data from the United Kingdom weighed on global markets today, capping a volatile week that has pushed gold up to its highest level in six years. The British pound is trading at a 2 year low against the dollar as new British Prime Minister, Boris Johnson, was planning for an election after an Oct. 31 Brexit. The Japanese yen rose as U.S.-China trade conflict jitters encouraged demand for safe-haven currencies, while the euro rose to $1.1202, showing little reaction after Italian Deputy Prime Minister Matteo Salvini called for early elections. The Canadian dollar is trading weaker at 1.3240 levels after disappointing domestic unemployment data for the month of July. Adding to this, the domestic unemployment rate jumped to 5.7% against 5.5% which further exerted some downward pressure on CAD. Further movement in the USDCAD pair will depend on incoming trade data which has been a key factor influencing the broader market risk sentiment. |