| Wrap Up |
| The Canadian dollar weakened, after nearing a nine-month high earlier in the day, as oil prices dropped in response to easing tensions between the United States and Iran. Canadian policy-makers’ current stance come as soft inflation data and global trade disputes have led other central banks including the Federal Reserve to signal they are ready to provide stimulus to counter an economic slowdown. The U.S. dollar index rose against a basket of currencies as surprisingly strong growth in U.S. retail sales in June soothed worries about the American economy and trimmed expectations the Federal Reserve may embark on a deep interest rate cut. Canadian government bond prices were mixed across the yield curve, with the two-year bond up 0.5 Canadian cent to yield 1.564% and the 10-year bond down 1 Canadian cent to yield 1.593%. |
| Levels and recommendations |
| Resurgent trade tensions, concern over the outlook for corporate America and the growing risk of a chaotic Brexit in the United Kingdom curtailed appetite for global equities and stoked demand for “safe” government bonds. The euro remains under pressure and its trading flat as weak business sentiment data heightened expectations the European Central Bank would cut rates twice this year. The US dollar tends to benefit from trade war jitters, but it’s backed by higher interest rates. It is also getting a boost from sterling, which is at 27-month lows on fears Britain will tumble out of the European Union with no trade agreement. The Canadian dollar is trading stronger at 1.3062 despite mixed domestic CPI data. Canadian monthly manufacturing sale posted a solid rebound in May, which largely offset weaker US housing market data. A strong rebound in crude oil prices provided some support to loonie. The USDCAD is trading above its long-term support of 1.3050 levels and its further movement will largely depend on outcome of US crude oil inventories due today. |