US Dollar Weakens Amid Recession Fears; Canadian Dollar Struggles

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

US Dollar        1.3850-1.3950

Euro                 1.4950-1.5050

Sterling            1.7650-1.7750

WTI Oil (opening level) $75.85

The US Dollar index is index is weaker this morning as the market fears of a possible recession begin to appear again. Stocks were routed yesterday on the back of poor results from the tech sector, a survey of US manufacturing data yesterday showed the weakest activity in 7 months, the US Federal Reserve is looking at an interest rate cut in September and today's employment report is pointing to weaker than expected job creation which all create the conditions for a recession. We could be arriving at a point of inflection for the US Dollar and it may start to trade much weaker if economic conditions in America turn sour.

 Not surprisingly the Canadian Dollar was unable to take advantage of the weaker US Dollar overnight with USD.CAD moving to the top end of recent range and opening the day near the 1.3875 (0.7207) level, The Loonie also trades weaker against the Euro and Pound so overall a poor end to the week for our Dollar. If the US Dollar is entering a period of significant weakness there is a very good chance that it drags the Loonie down as well.

 Stocks are pointing to another big drop on the opening as the market awaits the US jobs report where early expectations were for a 175K new jobs to have been created in June but that number may be a lot lower. Look for lots of volatility throughout the day.