Analysts at TD Securities, in a market wrap, explained that the North American equities saw a mixed performance on Tuesday with US indices (SPX: +0.3%) posting a rally while Canadian stocks (TSX: -0.8%) declined in response to rising geopolitical tensions with Saudi Arabia.
Key Quotes:
“Treasuries sold off by roughly 3bps across the curve as Canadian rates outperformed, leaving CAD-US spreads slightly narrower after a Canadian holiday on Monday.
“The USD traded lower against most G10 currencies, with AUD (+0.5%) leading the rally despite an uneventful RBA meeting while EUR (+0.4%) also outperformed. CAD (-0.4%) was a notable laggard though aforementioned geopolitical pressures may have played a part.”
“Chinese trade data and Australian home loans will set the tone for markets on Wednesday.”
What We’re Watching in Markets
“The DXY is again losing steam ahead of the key resistance levels. The consolidation in USDCNH has helped after policymakers increased the costs of selling CNH. The goal is stability rather than a reversal in the currency, though reducing the pace of the USDCNH appreciation should feed into the G10 and broader risk sentiment given the 7% rally since the summer.”
“For the G10, we see three forces at work: US/China trade, global growth, and the credit cycle. The global growth dynamics and the credit cycle are key to the next move in the USD and whether the rally fizzles out or starts to turn as we expect. On the growth side, high-frequency data argue that the G10 story is recovering while the US story is looking fatigued.”
Share
