Analysts at TD Securities explained that the North American markets saw a quiet session on Wednesday, with US equities little changed on the day while Canadian stocks outperformed on a 0.3% gain.
Key Quotes:
“Treasuries were slightly bid across the belly and long-end while Canadian rates underperformed by ~1bp through 10s.”
“The USD continues to trade on its back foot against G10 FX, with DXY (0.2%) posting its sixth consecutive decline on a move towards 95.”
“CAD (0.3%) led the advance amidst reported progress on NAFTA talks (even though Canada is not at the table), which also drove a 1.1% rally in MXN.”
“EUR (+0.3%) continued its recovery on a move through 1.16 while JPY (-0.2%) and AUD (-0.2%) underperformed.”
What We’re watching in markets
“10yr yields are nearing the lower bound of their multi-month range; slippage below 2.76/2.80% might lead to further softness in the USD – at the expense of the EUR and the JPY.”
“For now, we are mindful of material topside resistance located near 1.1630/60 in EURUSD and ~109.80 support in USDJPY.”
“CAD retail sales met expectations and focus now turns to Poloz’s upcoming media and Jackson Hole blitz for clues on a policy shift as soon as next month.”
“USD/CAD should find support on dips below 1.30 but we continue to think CAD will underperform vs. EUR and NOK.”
“With market barely reacting to the August FOMC minutes, the focus will shift to Chair Powell’s Jackson Hole remarks at 10am EDT on Friday. Treasuries are unlikely to react unless Powell mentions longer-term issues such as balance sheet runoff, the pace of hikes, or r*, but we expect little new information.”
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