Stocks are set to fall as the Fed gets ready to cutback on their stimulus program

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

US Dollar             1.2650-1.2750

Euro                     1.4900-1.5000

Sterling                1.7450-1.7550

The US Dollar Index is stronger this morning as investors are gearing up for an announcement next week at the Federal Reserve meeting as to when the Fed will start to cutback on their stimulus program. The overwhelming sentiment is that when the Fed starts to reduce their impact on the markets, stocks will fall in price just as the virus continues to increase hospitalization rates around the globe. I think the stock market could be in for a very bumpy ride in the Fall.

The Canadian Dollar had an uneventful overnight session, on Friday the Loonie gave back some strength as the August Employment number came in slightly lower than expected at 90.2K new jobs last month. It was still a fairly strong performance for the economy marking the third month in a row of job creation. The unemployment rate fell to 7.1% which is the lowest level since the pandemic started.

This week it will be inflation that once again takes centre stage with both the US and Canadian numbers coming out. The Canadian Dollar may see some benefit this week as rising raw material prices are rising rapidly (as an example aluminum prices have hit a 13-year high and oil opens at $70 a barrel) which should help our raw material industries but ultimately hurt consumer spending. I think it will be quite a volatile week so make sure you get your orders in early.