| Wrap Up |
| The Canadian dollar was little changed against its U.S. counterpart but held close to an eight-day low hit earlier in the session on worries about the global economic outlook. U.S. 30-year Treasury yields fell to a record low below 2%, 10-year notes dropped to a three-year trough and the 2-year yield hit its lowest level since October 2017 amid persistent fears about global trade tensions and economic slowdowns. Canadian yields have also fallen to multi-year lows and the yield curve has inverted the most in nearly two decades, which could coerce the BoC to cut interest rates rather than risk an economic downturn. The 10-year yield touched its lowest intraday level since October 2016 at 1.084%. It was trading 20.4 basis points below the 2-year yield, which shows that the curve has inverted since May 1999. |
| Levels and recommendations |
| Global stocks rose today as expectations grew of further stimulus by central banks, offsetting worries about slowing economic growth, which intensified this week as the U.S. yield curve inverted for the first time since 2007. The euro is trading under around 1.11 mark after recent comments by ECB’s O.Rehn, who suggested that the new ECB stimulus package would likely overshoot markets’ expectations. It is worth noting that the ECB could most likely deliver these new measures at the September gathering. The British pound is trading stronger around 1.2150 mark after strong UK retail sales data which provided some support to cable despite political uncertainty at home regarding Brexit. The Canadian dollar is trading flat around 1.33 mark despite broader strength in US dollar. The loonie got some support due to an increase in crude oil prices ahead of OPEC release of oil market report. Further movement in the pair will depend on Housing Starts Change and Building Permits data from the US. The USDCAD is expected to trade in range of 1.3286-1.3352 levels. |