USD index rises as stock markets react to the global shortage of microchips production materials

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

US Dollar         1.2300-1.2400

Euro                 1.4800-1.4900

Sterling            1.7050-1.7150

The US Dollar Index is marginally higher this morning as financial markets get back into full swing after the May Day holiday. Overnight, stock markets were a bit lower as a global shortage in the production of microchips due to the shortage of rare earth materials seems to be weighing on the manufacturing ability of many industries to meet demand. If this continues (and it may for a few years yet) it could weigh on some of the biggest companies in the world and put a damper on the US recovery.

The Canadian Dollar was one of the biggest losers last night as USD.CAD rose to trade at an overnight high of 1.2340 (0.8103) where it opens the North American market this morning. The Loonie also lost some ground to both the Euro and Pound so overall it looks like the shine is off the Loonie for the moment, once again the markets have shown that the Loonie is quite vulnerable to strength in the US Dollar.

Markets get a first look at US and Canadian trade data this morning and in Canada we are expecting a surplus of close to $500 Million in March, that will be down significantly from the previous month in February when the balance of trade was over a Billion Dollars. A poor number here could send USD.CAD back towards the 1.2400 (0.8064) level.