Natural gas and electricity prices skyrocket in Europe

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

US Dollar             1.2625-1.2725

Euro                     1.4825-1.4925

Sterling                1.7325-1.7425

The US Dollar Index is marginally stronger this morning in a stable overnight session. Markets have scaled back their fears of an Evergrande failure for the moment as the company met one of its mortgage obligations and the Chinese government injected a large amount of cash into the banking system to help avoid any damage to the wider financial market.

In Europe the energy woes for most countries continue as the price of natural gas and electricity skyrocket. In Austria and the UK the governments have had to come up with a support mechanism for fertilizer producers as they were preparing to shutdown due to the high energy costs, apparently natural gas is a key component in making fertilizer which the food supply is dependant on. This jump in energy prices has led to rapidly growing inflation and led the Bank of England to comment yesterday that they may look at an interest rate hike in November even before they start to reduce their stimulus program.

The Canadian Dollar has held onto its gains from earlier in the week but has not been able to extend them past the 1.2640 (0.7911) level. Yesterday saw the July retail sales report come in on the weaker side of markets expectation so there is little on the economic front to suggest the Loonie is going to go on a strong sustained run, I would still expect it to trade weaker in response to a stronger US Dollar.