USD Dominance: Markets Monitor BRICS Challenge and Dollar Resilience

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

US Dollar        1.3940-1.4150

Euro                 1.4660-1.4880

Sterling            1.7720-1.7920

WTI Oil (opening level) $68.82

The CAD is opening at 1.4040 ( 0.7122)

Key points

·    Equities: US markets hit record highs last week, Asia mixed with strong Chinese PMIs.

·    Volatility: Short-term caution lingers ahead of upcoming economic data

·    Currencies: USD resurgent in Asian session to start the week as Friday’s JPY strength also fades despite hawkish comments

·    Commodities: Gold weaker on dollar strength. Crude looks to China and OPEC+ for support

·    Fixed Income: Treasury and Bund yields dip as traders eye key economic data

I have written about the BRICS threat on the status of the USD dominance in the world. But it is interesting to note the perspective of the incoming president Trump. I read over the weekend how Trump wants to defend the strength of the USD in world trade. He suggested he would impose tariffs of 100% on countries associated with BRICS. The idea that those countries are trying to move away from the USD while the USA stands by and watches is over. He requires a commitment from these countries that they will not create a new BRICS currency, nor back any other currency to replace the mighty USD, or they will face 100% tariffs, and should expect to say goodbye to selling into the wonderful USA economy.

This is something to keep an eye on!