Canadian Dollar: Rates reaction follows GDP – TD Securities
TD Securities Macro Research Insight notes that markets began to sell off again following the flat July Canadian GDP print, despite its underwhelming nature. The move is concentrated in the front to mid-curve, with Bank of Canada (BoC) pricing unchanged and US yields near key technical levels.
Following the release of flat Canadian GDP figures for July, markets experienced a sell-off, primarily affecting the mid-curve portion of the yield curve. Despite the disappointment in the economic data, the reaction was consistent with recent positioning adjustments. The front-to-mid-curve market movement was noticeably subdued, as Bank of Canada rates remained unchanged post-print.
TD Securities analysts maintain a preference for front-end steepening, specifically in the 1-year to 5-year and 2-year tenors, while cautiously adding to 2-year long positions. Meanwhile, the Australian dollar fell to nine-week lows, following the Reserve Bank of Australia's decision to raise interest rates to 4.60%, sparking concerns about potential further hikes.
Meanwhile, the Japanese yen benefitted from hawkish Bank of Japan policies, consolidating around 157.50 in Asian trading hours. Meanwhile, rising expectations for US rate hikes and escalating oil prices are driving US bond yields to multi-year highs, providing support to the US dollar. Gold found some stability, trading above $4,100 per troy ounce.
Bitcoin and Ethereum continued their upward trend, while Ripple approached a significant technical level.
Written by urgent.news from FXStreet's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
