Stock market suffers as investors are worried about China and Taiwan conflict escalation

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

US Dollar             1.2800-1.2900

Euro                     1.3100-1.3200

Sterling                1.5650-1.5750

WTI Oil (opening level) $94.19

The US Dollar index is marginally stronger this morning as markets are worried about the Chinese response to the upcoming trip by Speaker Nancy Pelosi to Taiwan. US Treasury yields have fallen, stocks are pointing lower for the second day in the row and the Japanese Yen had its strongest gain in almost two years against the US Dollar as money is leaving the market and moving back into safe haven assets due to worry over the visit. China has threatened significant retaliatory action if Pelosi makes this visit and now that she is going ahead markets await with interest to see what the Chinese response will be.

The Canadian Dollar has been fairly steady to start the week even though it did lose some ground overnight. During yesterday's Canadian holiday USD.CAD fell to trade below the 1.2800 (0.7813) level for the first time in weeks but with the overnight strength in the Greenback it gave back some of that strength and opens the day at the 1.2850 (0.7782) level. If the markets rebound quickly after the Pelosi visit then we may see the Loonie recover and begin to trade stronger.

Nothing of major significance on the calendar until Friday's US and Canadian Employment reports. For today markets will be focusing on the Chinese response to Pelosi's visit so we could see bouts of enhanced volatility in all markets.