| Wrap Up |
| The Canadian dollar edged lower against its U.S. counterpart, retreating from Friday’s nine-month high, as oil prices were pressured by data showing China’s slowest economic growth in decades. The modest decline for the loonie came as data from the Canadian Real Estate Association showed that resales of Canadian homes fell 0.2% in June from the previous month. Tightening of mortgage rules and interest rate hikes by the Bank of Canada have weighed on Canada’s once red-hot housing market. Still, Canadian borrowers have benefited in recent months from a slide in global bond yields. Canadian government bond prices were higher across a flatter yield curve in sympathy with U.S. Treasuries. The two-year bond rose 2.5 Canadian cents to yield 1.568% and the 10-year bond was up 20 Canadian cents to yield 1.588%. |
| Levels and recommendations |
| Darkening German investor morale and fresh Brexit woes cast a shadow over global markets , with German benchmark bond yields coming under pressure. Germany’s ZEW indicator showed that the mood among investors in Europe’s largest economy deteriorated more than expected in July, with the survey pointing to the unresolved China-U.S. trade dispute and to political tensions with Iran. The US dollar index has accelerated the upside to fresh 4-day highs near 97.40 following upbeat results from US Retail Sales. In fact, headline sales and Core sales along with Manufacturing Production expanded for the month of May. The Canadian dollar is trading stronger at 1.3038 levels despite broader strength in the US dollar as strong domestic data showed that foreign securities purchased has increased for the month of May. However, rising crude oil prices also helped the commodity-sensitive loonie stay strong against its major rivals. Further movement in the USDCAD pair will largely depend on outcome of crude oil inventories. |