North American markets traded with a slightly cautious tone ahead of Friday’s G7 meetings, which could prove to be contentious after recent tariff announcements.
Key Quotes:
“USTs rallied by nearly 5bps across the belly and long-end while 2s10s narrowed by 2bps and Canadian rates saw a modest underperformance.”
“The USD was mixed with JPY (+0.4%) leading the G10 complex while AUD (-0.6%) weakened after a soft trade report. TRY (+1.2%) rallied after the CBRT hiked rates, leading us to go short USDTRY.”
“Chinese trade, German IP, Canadian employment and G7 developments will be the focus for markets on Friday.”
What We’re Watching in Markets
“EURUSD retreated from the notable pivot point of 1.1825/30 as BTP/Bund spreads widened again. While there are emerging signs of fading US exceptionalism (via relative data momentum or trade disputes), we think EURUSD may stay broadly tethered to this threshold and support located near 1.1725. Further, we think the 1.1890/1.1900 zone could attract selling interest though a number of EUR/crosses are challenging breakout levels.”
“CAD remains on the defensive and the upcoming jobs report will be closely followed. We continue to see upside for EURCAD with 1.5390 as next resistance. Treasuries are beginning to drift sideways ahead of next week’s FOMC and ECB meetings, and we look for volatile trading to continue. With little for investors to focus on in the near-term, look for choppy trading ahead of the weekend.”
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