| Wrap Up |
| The Canadian dollar weakened against its U.S. counterpart , pulling back from a near nine-month high hit earlier in the day, as domestic data showed a surprise decline in May retail sales and the greenback broadly climbed. The U.S. dollar index rose against a basket of currencies as fears of a larger-than-expected 50-basis-point interest rate cut in July abated after the New York Federal Reserve downplayed dovish comments from its president on Thursday. Speculators have raised bullish bets on the currency to the highest since March 2018. As of July 16, net long positions in the loonie rose to 20,964 contracts from 9,226 contracts in the prior week. The 10-year yield touched its lowest intraday level since July 5 at 1.485%, while the gap between Canada’s 2-year yield and its U.S. equivalent widened by 3.9 basis points to a spread of 36.2 bps. |
| Levels and recommendations |
| Global stocks lingered, hamstrung by dialed-down expectations for a larger U.S. rate cut this month, while escalating tensions in the Middle East boosted oil prices and rising fears for a no-deal Brexit haunted the pound. The euro was little changed at $1.1219 after shedding 0.5% on Friday. The dollar edged up 0.16% to 107.86 yen. The benchmark 10-year Treasury yield lingered at 2.0429%. Still, the pressure on equity markets limited the rise in safe-haven Treasury yields. The British pound fell nearly half a percent amid increasing bets on a no-deal Brexit before the Conservative Party chooses its new leader on Tuesday. The pound was last down 0.3% at $1.2463, having declined 1.6% against the dollar so far this month. The Canadian dollar is trading weaker above 1.3075 levels due to broader strength in the US dollar index. The crude oil prices got some boost after Iran seized another British oil tanker. Further movement in the USDCAD pair will largely depend on critical PMI and durable goods orders data, which are likely to impact the probability of the Fed opting out for multiple rate cuts in the remainder of the year. |