Data released Monday showing a rise in prices in the ISM Index lent support to the greenback, which continues to rally against all of the major currencies. Investors are currently pricing the likelihood of a key rate increase from the U.S. Federal Reserve (Fed) in December at 70%. It should be noted that since the FOMC meeting on Sept. 20, the U.S. dollar has gained ground against all G10 currencies.
Now more than ever, traders’ attention is turned toward the Fed and the Bank of Canada as the historic correlation between the Canadian dollar and the price of WTI crude oil appears to have completely fallen apart. For September as a whole, the daily correlation between the Canadian dollar and the price of crude oil was a meagre 11%, compared with 53% for the past two years. Prices for WTI crude oil are down slightly this morning, after sliding more than 2% yesterday.
Today, we’ll be keeping an eye on Bank of Canada Deputy Governor Sylvain Leduc, who will be speaking about entrepreneurship in Sherbrooke early this afternoon. The Canadian dollar and the euro are both up this morning and the futures market is pointing to a slightly bullish opening for North American stock markets.
Emmanuel Tessier-Fleury
Range of the day: 1.2350 – 1.2650