USD index jumps as traders react to poor Chinese financial data

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

US Dollar             1.2850-1.2950

Euro                     1.3100-1.3200

Sterling                1.5550-1.5650

WTI Oil (opening level) $87.55

The US Dollar index is stronger again this morning as poor Chinese data and an overnight interest rate cut by the Chinese Central Bank have all led to further investor speculation that a global recession is coming in the near future. Most stock markets are all lower overnight and the US Dollar index has jumped by 0.6% as investors look to the safe haven of US Dollar assets. Commodity currencies like the Aussie, Canadian and New Zealand dollars were all lower overnight as with a perceived slowdown in Chinese economic activity the demand for resource-based products will decline and these commodity-based economies will suffer.

USD.CAD opens the day back higher near the 1.2900 (0.7752) level and this is the first time in a few weeks that the Loonie has weakened off so much. Once again it is the strong US Dollar and the drop in commodity prices that we see pushing the Loonie back and forth in fairly tight ranges, it will be interesting to see if USD.CAD can break above the 1.3000 (0.7692) level as it has not really been able to in the past.

It will be a busy week for the Canadian stock markets and the Loonie as we get Canadian trade data today and inflation data tomorrow, the results of this data will set the tone for the next Bank of Canada meeting in early September. North American stocks are all pointing a lot lower on the opening so look for more US Dollar strength throughout the day and USD.CAD should test above the 1.2900 level at some point.