USD index gets stronger as investors stay nervous about the new stock market paradigm

Today's expected range for the Canadian Dollar against the major currencies:

US Dollar         1.2750-1.2850

Euro                 1.5450-1.5550

Sterling            1.7500-1.7600

The US Dollar Index had moved higher overnight as investor concern over the new Stock Market paradigm has made investors nervous and looking for more safe haven investments at the moment. Stocks had their worst week since last October as large hedge funds had to unwind massive short positions in some stocks that were pushed higher by large groups of retail investors banding together on the social media site Reddit, it looks like silver may be the next in line to see a big jump as the commodity touched a 5-month high on the back of increased activity from Reddit users. If this is indeed a new long-term way to invest it will be interesting to see how the regulators deal with the change and also how large hedge funds adjust their strategies but at the moment it is fascinating to watch as a lot of money is being made and lost.

The stimulus package that Biden has proposed as expected has run into issues with the Republicans who have opposed the $1.9 Trillion price tag and have come back with a lower proposal for Biden to consider. If this drags on for some time before it is implemented then you should see stocks suffer and the US Dollar move higher.

The Canadian Dollar opens the day at the 1.2800 (0.7813) level which is off its lowest levels of the session at 1.2765 (0.7834) but on the positive sign the Loonie did pick up a little strength against the other currencies. Once again as February starts the Loonie will continue to be pushed around by developments South of the border as there is little news on the horizon that should help the Loonie at the moment.

The week's calendar will be highlighted by the US and Canadian Employment reports on Friday but ahead of that all eyes will be on the developments in the stock markets to see if the madness continues.