It is a tough time for the Canadian economy, but technically the recession can be avoided

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

US Dollar        1.3550-1.3650

Euro                1.4300-1.4400

Sterling           1.6500-1.6600

WTI Oil (opening level) $91.70

The US Dollar index is stronger this morning as the US Government has kicked the proverbial can down the road for six weeks and avoided another shutdown. The FX markets are paying close attention to USD.JPY which inches ever closer to the 150.00 level where it is expected that the Bank of Japan will intervene in the market and sell some US Dollars to support the Yen. Markets will react to such a move in the short-term and the Dollar will sell off but it is unlikely that such a move will prove effective in the long-run.

The Canadian Dollar has had a tough couple of sessions after the August GDP report showed a flat growth rate after a 0.2% decline in July, technically Canada avoids a recession but there can be no doubt that the economy is in tough shape as high interest rates take their toll. USD.CAD has risen to trade above the 1.3600 (0.7353) level for the first time in weeks and the Loonie also lost considerable ground to the other currencies so overall a poor performance from the Loonie to start October.

The highlight of this week's calendar will be the employment reports from the US and Canada on Friday, now that the US Government won't close this week markets should remain stable and watch how the US economy copes with the continuing auto strike, high oil prices and an upcoming Federal Reserve interest rate hike in November.