Analysts at TD Securities noted that the North American markets traded with a positive tone, with US equities up 0.7% while the TSX (+0.2%) saw more modest gains.
Key Quotes:
“Treasuries bear-steepened in the front-end and belly, with 2s10s widening by 2bps while Canadian rates underperformed by 1bp across the belly and long-end. The USD posted a broad decline against G10 currencies with AUD (+0.6%) leading the move after strong Q1 GDP. EUR (+0.5%) rallied after ECB officials reinforced yesterday’s reports on tapering with hawkish commentary while CAD (+0.1%) saw limited gains after WH Advisor Larry Kudlow walked back remarks which argued Canada should be exempt from steel and aluminum tariffs. A CBRT rate decision and the Bank of Canada’s Financial System Review are the main events for Thursday.”
What the analysts are watching:
“The EUR continues to enjoy a bid as sentiment shifts a bit more constructively ahead of next week’s ECB meeting. A grind higher remains likely with 1.1825 as notable resistance for EURUSD. We are beginning to find value on the crosses with EURCAD nearing a trend breakout through the 200-day near 1.52.”
“USD/JPY challenges key resistance located near the 200-day ~110.00/20. A sustained break could open a re-test of 111.40 but we rather think the 200-day may prove to be rather thick.”
“Treasuries continue to await next week’s FOMC decision, but are now keeping a close eye on the ECB following a sharp rise in bund yields on news that the ECB could debate tapering QE next week. Meanwhile, the latest Treasury data continued to show strong long-end demand in May, with $5.9bn of Treasuries stripped during the month.”
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