Canadian dollar weakens as the price of oil fell by $7

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

US Dollar             1.3600-1.3700

Euro                     1.4300-1.4400

Sterling                1.6600-1.6700

WTI Oil (opening level) $75.85

The US Dollar index is marginally weaker this morning but that was only after a strong day yesterday on the back of some positive economic news out of the US. The Dollar reacted to the report from the Institute of Supply Management that showed the services sector of the US economy is doing very well at the moment and does not seem that affected by high inflation. These types of numbers will give the Federal Reserve more reason to keep using oversized interest rate hikes to combat inflation, the next US interest rate hike is scheduled for Dec 15th so we will see what happens.

The Canadian Dollar continues to suffer at the hands of a stronger US Dollar, yesterday in the wake of the stronger Greenback USD.CAD went from an early low of 1.3400 (0.7463) to trade as high as 1.3625 (0.7339) which is an oversized move in a short period of time. It also lost considerable ground to the other currencies so at the moment the Loonie is really suffering.

The price of oil dropped over $7.00 yesterday which could be having an effect on the Loonie as the Western nation imposed the price cap of $60 a barrel on Russian oil came into effect. We will see how this plays out in the weeks to come but for the moment volatile energy markets will hurt the Loonie.

After a tough day yesterday, stocks are again pointing lower on the opening which may give the Greenback another small boost to start. Canadian Dollar trading may see a small bit of added volatility as the market releases the October balance of trade numbers which are expected to show a small positive jump in our trade picture giving the Bank of Canada more room for an oversized interest rate hike tomorrow.