| Wrap Up |
| The Canadian dollar weakened by the most in more than five months against its U.S. counterpart on Wednesday as oil prices dropped and investors worried about the global growth outlook. China reported weaker-than-expected economic data for July, including a surprise drop in industrial output growth to a more than 17-year low, while a slump in exports sent Germany’s economy into reverse in the second quarter. Canadian government bond prices were higher across a flatter yield curve in sympathy with U.S. Treasuries. The two-year bond rose 6 Canadian cents to yield 1.352% and the 10-year bond was up 88 Canadian cents to yield 1.152%. The 10-year yield fell 6 basis points further below the 2-year yield to a spread of -20 basis points, the curve’s largest inversion since May 1999. |
| Levels and recommendations |
| China’s threat to impose counter-measures in retaliation for the latest U.S. tariffs knocked stocks sprawling, checking earlier attempt to recover from a rout sparked by fears of a world recession. The dollar rebounded and rose against the yen as better-than-expected retail sales data in the United States helped offset fears that the U.S. economy could be headed for a recession. Foreign exchange markets have remained relatively calm despite big moves in bond markets this week, where investors have piled into government debt in anticipation of a global growth slowdown. The Canadian dollar is trading flat at 1.3320 levels due to stronger US retail sales and NY Fed’s Empire state manufacturing data. However on the other hand stronger domestic Non-farm employment data for the month of July limited the losses for loonie. The USDCAD is expected to trade in the range of 1.3275-1.3350 levels for the day. |