USD index should remain relatively strong in October

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

US Dollar             1.2575-1.2675

Euro                     1.4600-1.4700

Sterling                1.7100-1.7200

The US Dollar Index is marginally stronger this morning in what was a relatively quiet start to the week when you consider the volatility that we saw in the financial markets last week. As we fully start the month with a busy economic calendar the US Dollar remains on a strong footing, for the moment the Evergrande situation in China seems to be resolving itself as the central bank in China tries to make sure a possible default does not drag down the rest of the economy, in Europe the energy crisis seems to be abating somewhat as supplies are once again getting to the petrol stations but we will see what happens with prices in the long run and how this issue effects the overall economic recovery. Finally, the US markets continue to wait for the Federal Reserve to announce the date this year that they will start to reduce their stimulus program and look to increase interest rate in 2022, the US Dollar should remain on a strong footing as long as these conditions continue.

The Canadian Dollar was able to hang onto some overnight strength, despite a poor showing with the July GDP report on Friday the Loonie has been able to extend some gains against both the US Dollar and Euro. USD.CAD has fallen to trade at 1.2615 (0.7927) this morning and EUR.CAD has also dropped from the high of 1.4800 seen late last week. OPEC has announced this morning that they will keep oil production at 400K barrels a day so we will see what happens to the oil price (which had been trending higher over the past few weeks) and its effect on the Canadian Dollar.

The highlight on the calendar this week will be US and Canadian Employment reports from September on Friday, ahead of those numbers the markets will continue to focus on the upcoming Fed announcement and also the negotiations in Congress on the Biden administration infrastructure package that is being delayed by Democratic party infighting over the bill. It looks like the US government has now delayed a possible default until early November but the issue of the debt ceiling will have to be addressed before then.