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Financial Markets Daily Summary - July 9, 2018

Core Content Overview

This report provides a detailed summary of interest rates, foreign exchange rates, and forward exchange rates for July 9, 2018, comparing the current rates with those from the previous week and four weeks ago. The data is sourced from the Royal Bank of Canada and is intended for informational purposes only.

Interest Rates

North American Interest Rates

Key Observations:

• The spread between Canadian and U.S. interest rates has remained relatively stable over the past month, with a consistent negative spread (indicating U.S. rates are higher than Canadian rates).
• The spread widened slightly for the 30-year term from -0.73 to -0.76.
• The spread narrowed for the three-month term from -0.69 to -0.73.

Foreign Exchange Rates

USD to Major Currencies

Key Observations:

• The Canadian dollar (CAD) weakened against the U.S. dollar (USD), with a rate of 0.7647 today, down from 0.75838 a week ago and 0.77056 four weeks ago.
• The U.S. dollar strengthened against the Japanese yen (JPY), with the rate decreasing to 110.495 today from 110.895 a week ago and 110.035 four weeks ago.
• The Mexican peso (MXN) depreciated against the U.S. dollar, with the rate at 19.076 today, down from 19.953 a week ago and 20.593 four weeks ago.
• The Chinese yuan (CNY) weakened against the U.S. dollar, with the rate at 6.608 today, compared to 6.67 a week ago and 6.408 four weeks ago.
• The U.S. dollar appreciated against the Swiss franc (CHF), with the rate at 0.9888 today, up from 0.9936 a week ago and 0.9853 four weeks ago.

Cross Currency Rates

Key Observations:

• The U.S. dollar remains the strongest currency, with the lowest cross rates against most currencies.
• The Canadian dollar is the weakest against the U.S. dollar and the British pound.
• The Japanese yen has a strong relationship with the U.S. dollar, with the rate decreasing slightly to 110.495 today.
• The Mexican peso continues to show a strong correlation with the U.S. dollar.

Forward Exchange Rates

Key Observations:

• The forward rates for the Canadian dollar (C$) show a slight depreciation against the U.S. dollar over time.
• The Euro and UK pound are expected to depreciate further against the U.S. dollar in the long term.
• The Yen is expected to weaken significantly against the U.S. dollar over the next five years.

Summary of Key Trends

• Interest rates in Canada remain lower than those in the U.S., with a consistent negative spread across all terms.
• The Canadian dollar has weakened against the U.S. dollar and other major currencies.
• The U.S. dollar has shown strength against the Japanese yen and Mexican peso, but has weakened against the British pound.
• Forward exchange rates suggest a continued depreciation of the Canadian dollar, Euro, and UK pound against the U.S. dollar in the long term.

This data provides insight into the current and expected trends in the North American and global financial markets.