Wrap Up
The Canadian dollar weakened to a near one-month low against its U.S. counterpart, as the greenback broadly rallied and as weaker-than-expected domestic data since the end of last week prompted investors to sell the currency.
The U.S. dollar index was also boosted against a basket of currencies by a two-year deal between U.S. President Donald Trump and lawmakers to lift government borrowing limits to cover spending.
The price of oil, one of Canada’s major exports, rose after the head of U.S. Central Command said the United States may have taken down a second Iranian drone over the Strait of Hormuz last week.
Canadian government bond prices were lower across the yield curve, with 2-year bond down 3 Canadian cents to yield 1.453% and 10-year bond falling 8 Canadian cents to yield 1.494%. The 10year yield touched its lowest intraday since July 4 at 1.454%.
Levels and recommendations
Global stock markets were mixed Wednesday following a report U.S. and Chinese trade envoys will meet for talks next week.
Markets have welcomed any sign of possible progress despite warnings the U.S.-Chinese truce is fragile because the two sides still are separated by the same disputes that caused talks to founder in May. Those include U.S. restrictions on technology sales to Chinese tech giant Huawei.
The euro is trading below 1.1150 mark after disappointed PMI data with Germany’s manufacturing recession seen deepening, recording its weakest print in almost 7 years. The British pound is trading near 1.25 mark as UK Chancellor of the Exchequer Phillip Hammond resigned ahead of Boris Johnson’s reign as UK PM.
The Canadian dollar is trading flat at 1.3140 levels as investor continued scaling back expectations of a 50 bps rate cut by the Fed at its upcoming monetary policy meeting on July 30-31. Further movement in the USDCAD pair will depend on US new home sales data due today. The USDCAD is likely to trade in the range of 1.3125-1.3170 levels for the day