Oil price has hit a 7-year high last night

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

US Dollar             1.2550-1.2650

Euro                     1.4500-1.4600

Sterling                1.7075-1.7175

The US Dollar Index is marginally weaker after a chaotic overnight session in the energy markets. Prices of both natural gas and oil were extremely volatile last night as the oil price hit a 7-year high before falling back and natural gas in Europe was up over 40% until Russian President Putin announced that Russia would be willing to ship record amounts of the commodity to Europe to alleviate the crisis. As the energy markets calmed down stocks recovered and the Greenback gave back some of its overnight strength.

It looks like there is temporary peace in the US Government as the Democrats and Republicans have agreed to increase the debt ceiling until December when the game of brinkmanship with the American economy will continue. Until there is an agreement to not have a cap on the size of the government debt then this issue will continue to make markets nervous, it is a catch-22 scenario as if they lift the debt ceiling then markets will worry about the size of the American deficit, no easy way around this spending issue in the short-term.

The Canadian Dollar has a positive night as it was able to pick up some strength against the US Dollar and other currencies. USD.CAD once again opens the day back below the 1.2600 (0.7937) level, each time over the past few sessions when the currency pair opened below 1.2600 the exchange rate has snapped back higher so we will see how it makes out today and if the Loonie can hold onto this strength. If the oil price continues to fall from its highs then I would think there is not much room for the Loonie to get stronger.

Nothing of note on the calendar for today, markets will get setup for tomorrow's jobs numbers out of the US and Canada. If the US number is strong then the markets will look to the Federal Reserve to start unwinding their stimulus next month.