Baystreet.ca – Yesterday’s rally ended abruptly when US Treasury yields started rising which sparked a sharp jump in the Canada/US 10-year yield spread. It widened -131 today from -120 and that fueled Canadian dollar selling.
The Canadian dollar continues to suffer after Trump claimed that a 25% tariff increased on Canadian imports would go into effect on February 1. The Canadian dollar continues to be weighed down by political uncertainty, a very sluggish economy and expectations that the BoC will cut rates by 25 bps next week.
Large option expires at 10 am are likely to roil markets if is trading near 1.4400 or 1.4450.
Canada Retail Sales are expected to rise 0.2% m/m in November compared to 0.6% in October. The fact that a sales tax holiday that started in December likely led to reduced spending to allow consumers to take advantage of the windfall.
US weekly jobless claims are expected to rise by 3,000 to 220,000.
Asian equity indexes were mixed despite Wall Street closing with gains. Australia’s ASX200 and the Hong Kong lost 0.61% and 0.40%, respectively. Japan’s gained 0.79%. In Europe, stock markets made modest gains, with the exception of the UK , which remained unchanged. Meanwhile, S&P 500 index futures dipped 0.12%, while the US 10-year Treasury yield settled at 4.634%.
traded in a 1.0391-1.0421 band in an uninspired market. A flurry of ECB official were commenting on the monetary outlook but they were ignored because a 25 bp ECB rate cut is next week is universally expected.
traded defensively and is near the bottom of its 1.2294-1.2327 overnight range. A lack of significant market-moving events discouraged active trading while UK BRC data for January revealed a decline in consumer sentiment for personal retail spending.
is in the middle of its 156.21-156.75 range with traders sidelined ahead of tomorrows Bank of Japan monetary policy announcement when a 25 bp rate hike is expected to be announced. Notably, Japan’s trade deficit turned into a surplus, in December, aided by a 2.8% increase in exports.
consolidated recent losses in a 0.6256-0.6282 range. The currency pair moved off the overnight low after benefited from China took steps to shore up its stock market.
