American dollar skyrockets as investors see potential threat to the stock markets

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

US Dollar             1.2800-1.2900

Euro                     1.4975-1.5075

Sterling                1.7525-1.7625

The US Dollar Index is much stronger this morning as equity investors flock to the US Dollar and safe haven assets. Investors are deeply concerned with the possible imminent bankruptcy of a company called Evergrande which is one of the largest property developers in China, Evergrande has now missed two bond repayments to investors and is believed to be on the verge of going bankrupt. Overnight stock markets are all lower and North American markets will be watching what happens with this company and what the Chinese Government does to contain any fallout effect, Stocks are all pointing lower this morning on the fear of this situation spreading and if it does create havoc then you will see global stocks continue to fall and the US Dollar move much higher.

The Canadian Dollar has been hard hit overnight and USD.CAD opens the day at the 1.2825 (0.7797) level for the first time in a month. The Loonie was also hit by falling commodity prices so at the moment it is not looking very good for our Dollar, I think we could easily see it touch 1.2900 (0.7752) before to long.

The calendar is quiet until Wednesday where we get the Federal Reserve Interest rate announcement and more comments on when they will start to taper their stimulus program, most investors would now expect that to start happening this fall but if the Evergrande default spreads around the globe then they may rethink this strategy. Either way look for enhanced volatility throughout the week.