| Wrap Up |
| The Canadian dollar edged higher against its U.S. counterpart, with the currency recovering from an earlier five-day low as easing of global trade tensions raised investor risk appetite. The United States government will delay imposing a 10% tariff on certain Chinese goods, including laptops and cell phones, that had been scheduled to start next month, the Office of the U.S. Trade Representative said. Canadian government bond prices were lower across a flatter yield curve in sympathy with U.S. Treasuries, as trade tensions eased and data showed a pick-up in U.S. inflation. The 2-year bond fell 9 Canadian cents to 1.376% and the 10-year bond was down 30 Canadian cents to 1.23%. The 10-year yield fell 1.7 bps further below the 2-year yield to a spread of -14.6 basis points, the curve’s largest inversion since June 2000. |
| Levels and recommendations |
| Global markets tanked and oil prices fell sharply after a closely watched bond indicator pointed to the growing risk of a U.S. The euro is trading below 1.1150 mark after German GDP numbers came in below consensus. This has resulted in concerns about recessions in the US and Europe region. The British pound is trading around 1.2065 levels after UK CPI, 12-month rate came in at 2.1% in July, when compared to 2.0% booked in June while bettering expectations of a 1.9% print, according to the UK Office for National Statistics report. The Canadian dollar is trading weaker above 1.33 mark as crude oil prices tank due to larger than expected increase in crude oil inventories. Further dismal retail sales and industrial production data from China revived concerns over a global economic slowdown which further dampened the price of crude oil prices, underpinning the demand for loonie. Further movement in the USDCAD pair will largely depend on domestic employment data which is due on Thursday. The USDCAD pair is expected to trade in the range of 1.3285-1.3352 levels for the day. |