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Favourable Yield Differentials Gives CAD Some Support

CANADA
  • FI: GoCs largely tracking Tsys so far in light of specific drivers, with a 5-10Y led rally (-7.5bps).
  • It has however preserved a continued widening in the Can-US yield differential, which at 8.5bps in both 2Y and 10Y tenors is at highs from a three-month range.
  • FX: USDCAD trades near this week’s highs but gains are limited to +0.3% at 1.3030 as CAD continues to outperform other risk sensitive majors. It sits just off initial resistance at 1.3052 (May 10 high) after which it would open 2020 levels with 1.3091 (Nov 24, 2020 high).
  • News: Pierre Poilievre, clear favourite to lead the main opposition Conservative Party, overnight pledged to fire BoC Gov Macklem if he was elected PM – but the next election is currently set for on or before Oct-2025.

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