| Wrap Up |
| The Canadian dollar strengthened against its U.S. counterpart, recovering from a two-month low it hit the previous day after stronger-than-expected domestic inflation data, but earlier gains were capped as the greenback rallied broadly. The U.S. dollar gained against a basket of currencies after minutes from the Federal Reserve’s July meeting showed that policymakers were united in wanting to avoid the appearance of being on the path to further rate cuts. Canada’s annual inflation rate held steady in July at 2% as lower costs for services were offset by higher prices for durable goods.. Canadian government bond prices were lower across the yield curve, with the two-year bond down 10 Canadian cents to yield 1.395% and the 10-year bond falling 53 Canadian cents to yield 1.213%. |
| Levels and recommendations |
| Global share markets slipped as uncertainty over the outlook for U.S. interest rate cuts left investors on edge, with the release of minutes from the Federal Reserve’s last policy meeting exposing rifts over its recent easing. The Chinese yuan’s slump to an 11-year low also sapped their appetite for risk, with dealers saying state-owned banks were seen selling dollars to support the yuan. The euro is trading flat at 1.1080 levels despite better than expected German PMI data as minutes from the last ECB meeting noted the slowdown appears to last longer than initially estimated, while members showed concern over the decline in longer term inflation expectations. The Canadian dollar is trading below 1.33 levels due to stronger domestic wholesale sales number came in for the month of July. On the other hand weakness in US dollar is seen after Kansas Fed President George, who voiced her opposition to further rate cuts. The USDCAD pair is expected to trade in the range of 1.3250-1.3325 levels for the day. |