U.S. stocks rallied to all-time highs after a trade truce with China, though finished well off highs of the day as measures of manufacturing activity showed growth slowing in the world's largest economy. Treasuries fell with gold. The S&P 500 ended at a record for the first time in 10 days, led by a surge in chipmakers after President Donald Trump agreed to ease a ban on American companies supplying Chinese tech giant Huawei. The Nasdaq 100 hit a two-month high. Industrial shares underperformed, as a U.S. manufacturing gauge showed orders stalled last month.
Yesterday, USDCAD moved from 1.3116 up to 1.3139 before falling to 1.3090. Since peaking at 1.3567 on May 31(within 1 cent of a 2 year high) USDCAD has fallen nearly 5 cents towards an 8 month low. Canadian GDP data beat estimates this morning sending USDCAD down to 1.3068 – the lowest level since Feb. 1 / 2019 and Nov. 7th / 2018. There has since been a move up to 1.3100 followed by a decline to 1.3080. The USD is broadly weaker today and is the worst performing currency this week and month as the USD index trades near 5 month lows. The market now awaits any trade related comments from this weekend's G20 Summit in Japan.
U.S. stocks rose as investors speculated the Trump administration would avoid escalating its trade war with China this weekend at the G 20 meeting. U.S. Treasuries advanced while oil slipped from its highs. Meanwhile U.S. Initial jobless claims came in at a 7 week high.
The USD has dropped this morning to its lowest level since Feb.27th after a larger than expected draw in crude oil. The S&P 500 pared early gains as health-care shares and consumer staples weighed on benchmarks. Futures spiked overnight after CNBC report that Treasury Secretary Steven Mnuchin said a trade deal was 90% done. The report was corrected to indicate that the comments referred to May. Ten-year Treasury yields pushed above 2%, while oil rose to a 4-week high on supply concerns, and gold retreated. While the administration's trade comment revived risk appetite, a major breakthrough may not come during the weekend's meeting between Presidents Donald Trump and Xi Jinping. Trump once again threatened Wednesday substantial additional tariffs if a deal can't be reached. Meanwhile, many traders hope the Federal Reserve will mitigate any headwinds to global growth with deep cuts, though Fed member James Bullard made clear Tuesday that's not a given.
Steve Brown, Senior Corporate Trader | Stevebrown@vbce.ca
The CAD was the best preforming currency this week with the EURO a close second. The USD was the worst performing currency with losses intensifying after Wednesday's dovish U.S. Fed statement and down-graded inflation forecast. USDCAD opened the week near 1.3433 and dropped to 1.3365 on Tuesday as talks of further easing by the European Central bank and an expected dovish U.S. Fed spurred global equity markets with the DJIA soaring nearly 500pts to new historical highs. USDCAD dropped from 1.3384 down to 1.3337 Wednesday morning after stronger than expected Canadian inflation data essentially erased any chance of an interest rate cut by the Bank of Canada. The U.S. Fed kept rates unchanged but opened the door for two interest rate cuts by the end of 2020 according to the Fed dot plot. Inflation expectations were revised lower – from 1.8% down to just 1.5% for 2019. The market is now pricing in a 71% probability of a 0.25% rate cut and a 29% chance of a 0.50% rate cut at the July 30 U.S. Fed (FOMC) meeting. Just 1 month ago, the probability that rates would be kept unchanged was 82%. USDCAD dropped to 1.3260 – just above last week's 1.3242 low. Broad USD weakness continued Thursday as equity markets pushed higher and oil prices jumped 3% as U.S. / Iran tensions escalated. USDCAD dropped to 1.3150 – the lowest level since Mar.1 and within 1 cent of an 8 month low. On Friday, Canadian retail sales were largely as expected while gold broke the $1,400 level to trade near 6 year highs. Oil prices tested the $58 level – having gained 14% over the past 8 days. The USD index fell to a 3 month low while U.S. 10 year yields rebounded back above 2.00% after having fallen to 1.97% / 3 year lows on Thursday. USDCAD climbed from 1.3162 up to 1.3230 and closed the week near 1.3220.
U.S. stocks fell while gains in Treasuries pushed the 10-year yield below 2% as simmering geopolitical tensions damped investor appetite for risk. Gold jumped. The S&P 500 dropped for a third-straight session as U.S. officials downplayed expectations ahead of highly-anticipated meeting between President Donald Trump and China's Xi Jinping this week. The 10-year Treasury yield slipped back below 2%, a level that until last week it hadn't breached since 2016, ahead of a speech by Federal Reserve Chair Jerome Powell Tuesday afternoon. West Texas oil rose as investors weighed escalating tensions between the U.S. and Iran against the possibility of OPEC+ extending production cuts. Gold jumped to the highest in six years and the yen hit the strongest since January against the dollar. German bunds fell to a record.
U.S. equities fluctuated near records as investors weighed expectation for easier monetary policy against rising tensions in the Middle East. Treasuries advanced, while the dollar edged lower. Investors in risk assets have continued to shrug off signs of a global economic slowdown and focus on the increasingly dovish tone at the central banks around the world. That attention will intensify Tuesday when Fed Chair Jerome Powell discusses monetary policy. But sentiment could be at a crossroads as the conflict between the U.S and Iran has ramped up, and the meeting between China's President Xi Jinping and Trump this week at the Group 20 conference in Japan presents a pivot for trade relations between the 2 counties.
Yesterday, USDCAD dropped from 1.3390 down to 1.3151 – a 4 month low before rebounding briefly to 1.3222. The pairing then eased lower towards 1.3180 in late trade. The USD sell-off continued in early Asian trade as gold jumped to $1,411 – a 6 year high while the USD index dropped towards 3 month lows. USDCAD fell to 1.3162 before climbing back to 1.3200 ahead of the Canadian retail sales data. There was little market reaction after the release as the headline miss was offset by a positive revision to prior data. USDCAD has since revisited yesterday's NA session high of 1.3222 before falling back to 1.3210.
Steve Brown, Senior Corporate Trader | Stevebrown@vbce.caThe USD was the best preforming currency this week after having closed last week near 3 month lows. USDCAD initially gapped lower at the open (from 1.3265 down to 1.3242) in reaction to Trump's announcement that he would not place tariffs on Mexico. The pairing held a fairly narrow 1.3250 – 1.3309 range through mid-day Wednesday before climbing to 1.3345. Trade tensions re-surfaced on Wednesday with equity markets moving lower. Oil prices also plunged as much as 7% towards a 5 month low from Monday's levels. On Thursday, oil prices rebounded by 5% briefly sending USDCAD back down to 1.3300. The USD moved up sharply on Friday after the release of U.S. retail sales and industrial production data. The USD index climbed to a 1 week high as did USDCAD – eventually closing the week near the highs just above 1.3400. Recent U.S. data has largely disappointed fueling calls for the Fed to lower its key interest rate. Friday's data showed improvement with notable positive revisions to prior data. Oddly enough, the U.S. 10 year yield failed to recover and remained anchored near 3 year lows @ 2.08%. The market now awaits the key U.S. Fed interest rate announcement out at 11:00am, Wednesday June 19th. There is a slight possibility they will cut interest rates. If rates are held unchanged, look for rhetoric to suggest potential cuts in the near future.
U.S. stocks surged to a record, while sovereign bonds worldwide extended gains and the dollar tumbled as the Federal Reserve's dovish shift reverberated through global markets. Gold rose to the highest in more than 5 years as Iran shot down a U.S. drone, stoking tensions in the Gulf and propping up oil.
U.S. equities were little changed Wednesday while Treasuries slipped as investors prepared for the latest Federal Reserve meeting to conclude, with anticipation growing that policy makers will signal a readiness to lower rates. The 2 main U.S. stock gauges drifted alongside the dollar, while the Stoxx Europe 600 was also little changed. Earlier, shares in Asia rallied, tracking the gains Tuesday that almost sent the S&P 500 to a record high after President Trump tweeted that he will sit down with Chinese President Xi Jinping at the G-20 summit next week. As many of the world's biggest central banks signal a shift to easier policy, traders are weighing that against trade war fears and signs of cooling global growth.
U.S. stocks surged on hopes that President Donald Trump will de-escalate his trade war with China, adding to gains sparked by the ECB's signal it is ready to cut interest rates if warranted. Treasuries rose. The S&P 500 jumped within 1% of its all-time high after Trump tweeted that he will meet with China's Xi Jinping at the Group of 20 summit next week. Trade tensions have weighed on stocks since Trump escalated his trade war in early May. Stocks and bonds rallied around the world after Mario Draghi said the European Central Bank is ready with stimulus if needed, adding to expectations for easier monetary policies. The Federal Reserve is widely expected to strike a more dovish tone with its decision Wednesday. The 10-year Treasury yield fell to 2.01% before the notes pared gains on the Trump tweet. German 10-year rates tumbled further below zero.
U.S equities gained, led by FANG shares while European stocks pared losses following a mixed session in Asia as a big week for central-bank policy gets underway. The dollar weakened after a Federal Reserve survey of factories in New York State plunged in June by most on record, before trimming its loss. Treasuries pared a drop on the news, but they stayed lower alongside European bonds as investors looked ahead to a week in which the Fed, the Bank of Japan and the Bank of England all set monetary policy. Investors will be scrutinizing the Fed's decision on Wednesday for signals in the chances of rate cuts ahead. We'll find out on Wednesday if the market is right about how dovish it is when it comes to monetary policy.
Garo Mavyan | Retail FX & Precious Metals Trader
With the governments of the United States, Mexico and Canada all signing onto the new USMCA (United States-Mexico-Canada) Trade Agreement, it seemed as though President Trump's longstanding promise to redo NAFTA was assured. However, in an unexpected move, Trump once again flared up political tensions between his country and Mexico by threatening to impose a 5% tariff on Mexican imports—with a gradual increase to 25%—if the Mexican government doesn't adequately stop illegal immigration over the US border. Understandably, this surprise announcement has sent destabilizing shockwaves throughout the market. Trump has framed these new tariffs as a border security issue, although they undoubtedly have the potential to negatively impact the economies of all three partner nations in the USMCA.
Yesterday, USDCAD initially dropped from 1.3342 down to 1.3300 as oil prices surged as much as 5%. The move lower was short-lived and the pair climbed back to hold a 1.3316-1.3336 range for the balance of the session. The USD is the best performing currency today and for the week as well. The USD was the worst performing currency last week and the index had fallen to a 3 month low. The index has since moved up to a 1 week high. U.S. retail sales data improved while there was also a positive revision to prior data. U.S. industrial production also showed improvement. After the release of this morning's economic data, the USD broadly gained taking USDCAD from 1.3330 up to a 1 week high of 1.3386. Pull-backs have been limited to 1.3360 thus far. Despite the improved data and USD strength, the U.S. 10 year yield is still holding near 3 year lows suggestive of market expectations for U.S. Fed interest rate cuts. The U.S. Fed will release its policy statement and economic projections next Wednesday.
U.S. equities rose with European stocks, shrugging off losses in Asia as well as a host of simmering geopolitical tensions. Oil surged and Treasuries nudged higher. The S&P Index climbed to a five week high as hope springs of a Federal Reserve rate cut. Plenty of caution remains in the market however, buoying government bonds.
U.S. tech shares slumped as concern about trade tensions blunted optimism that slower-than forecast inflation would allow the Federal Reserve to cut rates. Treasuries climbed and oil fell. Chipmakers were among the worst performers as the S&P 500 Index slumped, with defensive sectors like utilities faring the best. The tech-heavy Nasdaq 100 dropped the most in a week. The Stoxx Europe 600 index headed for its first drop in four sessions, led by oil producers. Just as investor concern over protectionism and global growth seemed to be easing, President Donald Trump's announcement that he is personally delaying a trade deal with China and won't complete the accord unless Beijing returns to terms negotiated earlier this year set in motion a fresh wave of uncertainty. The monthly inflation numbers released Wednesday supported the idea the Fed can cut borrowing costs after the president scowled at "way too high" interest rates. With no assurance that China will meet with the U.S. on the sidelines of the G-20 later this month, trade tensions continue to fuel market uncertainty, yet, the growing probability of Fed cuts is counterbalancing trade concerns. The matter is crucial to global growth.
U.S. equity markets rose Tuesday, boosted by fresh stimulus measures out of China designed to support the world's second-largest economy. The Dow Jones Industrial Average rose 0.5%, the S&P 500 advanced 0.7% and the tech-heavy Nasdaq Composite gained 0.8%. Treasuries dropped as the Markets are still fixated on U.S. – China trade . Meanwhile the Canadian dollar traded in one of its most narrow ranges in history over the past trading session versus the U.S. dollar.
U.S. stocks joined a global rally in equities after President Donald Trump suspended plans for tariffs on Mexico. Sovereign bonds fell across the board, along with gold and the yen, as demand for havens ebbed. The S&P 500 Index advanced for a 5th straight session, led by chipmakers and auto companies. Emerging-market shares headed to their biggest increase since January as Mexico's peso strengthened the most in almost a year after the accord with the U.S. late Friday. The dollar climbed, particularly versus the pound after weak economic data in the U.K. The onshore yuan fell to its weakest level since November after China's central bank governor hinted there was no line in the sand for the currency. Treasuries slumped. U.S. stocks got an additional boost from large takeover deals Monday. But investors were also looking toward the next developments in the U.S.-China trade showdown. Treasury Secretary Steven Mnuchin has said the "main progress" on trade may occur when presidents Trump and Xi Jinping meet at the G-20 summit later this month, while finance chiefs over the weekend warned about escalating risks from geopolitical tensions.
Yesterday, USDCAD initially climbed from 1.3410 up to 1.3430 before falling to hold near 1.3360 (near 6 week lows) for the balance of the session. The USD was broadly weaker on the day as equity markets gained for the 4th consecutive day erasing the entirety of last week's losses. The USD has broadly dropped today on the back of a weaker than expected employment report. The headline drastically missed while there was also a 75,000 negative revision to the prior two months of data. Canada added 27,700 jobs – all of them full-time while the unemployment rate fell to 5.4% - the lowest since 1976. USDCAD has fallen from 1.3364 down to 1.3263 – the lowest in 3 months. The USD index has fallen from near two year highs last week towards 2.5 month lows.