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Financial Markets Daily Summary - July 6, 2018

Core Content Overview

This report provides a snapshot of interest rates and foreign exchange (FX) rates in North America and globally, comparing current values with those from the previous week and four weeks ago. It includes data on Treasury and money market rates, cross currency exchange rates, and forward exchange rates.

Interest Rates (North America)

The table below outlines the current and historical interest rates for various terms in Canada and the U.S.:

Key Observations:

• The spread between Canadian and U.S. interest rates has remained relatively stable, with a range between -0.64% and -0.76% across different terms.
• U.S. rates have generally increased slightly compared to the previous week, while Canadian rates have remained mostly unchanged.
• The spread widened slightly for longer-term rates (e.g., 30-year) over the past four weeks.

Foreign Exchange Rates

The following table presents the current and historical FX rates for major currencies:

Key Observations:

• The Canadian Dollar (CAD) has weakened slightly against the U.S. Dollar (USD), with a spread of -0.76% for the 30-year rate.
• The U.S. Dollar has appreciated against the Japanese Yen (JPY) and Mexican Peso (MXN), with JPY/US decreasing and MXN/US also showing a decline.
• The U.S. Dollar has depreciated against the Chinese Yuan (CNY) and New Zealand Dollar (NZD), with CNY/US and US/NZD both showing a slight decrease.
• Gold and Silver prices have remained relatively stable, with minor fluctuations.

Cross Currency Rates

The cross currency rates provide the exchange rates between major currencies, with USD as the base:

Key Observations:

• The USD remains the dominant currency, with consistent rates across different currencies.
• The CAD has weakened against the USD and other major currencies.
• The EUR has appreciated against the USD and other currencies, with a notable spread.

Forward Exchange Rates

The forward rates for major currencies show the expected exchange rates at future dates:

Key Observations:

• The forward rates for the CAD, EUR, and GBP show a slight depreciation against the USD over time.
• The USD has a consistent forward rate, indicating strong demand and stability.
• The EUR and GBP have shown a gradual appreciation against the USD in the forward market, suggesting potential inflationary pressures or economic growth expectations.

Summary

The report highlights a stable interest rate environment with minimal changes in the short term, but a slight widening of the spread between Canadian and U.S. rates for longer-term instruments. FX rates show a weakening of the CAD against the USD and other major currencies, while the USD has appreciated against the JPY and MXN. The forward rates suggest a continued depreciation of the CAD and a gradual appreciation of the EUR and GBP against the USD, reflecting market expectations and economic trends.