Chinese markets require another stimulus as the consumer sector fell into deflation

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

US Dollar         1.3400-1.3500

Euro                 1.4700-1.4800

Sterling            1.7050-1.7150

WTI Oil (opening level) $83.81

The US Dollar index is marginally weaker this morning in a relatively quiet market, most investors will await tomorrow's US inflation report to determine their next moves. The biggest story from the overnight market was the announcement that prices are falling in China and that economy may require further stimulus from the Chinese Government to support their markets. If such support happens in the coming weeks, it should be positive for commodity currencies like the Canadian and Australian dollars and provide some short-term strength.

The Loonie was very quiet overnight but was able to recover some small number of losses on the back of the weaker US Dollar, USD.CAD moved back down towards the 1.3400 (0.7463) level where it will most likely remain ahead of tomorrow's US inflation report. The Loonie was also able to pick up some small gains against the other currencies but not enough to move the needle.

Stocks had a tough day yesterday but look to recover a bit this morning on the Chinese overnight news, the equity markets would welcome any stimulus to ensure the Chinese economy remains strong. Nothing of note on the calendar today so look for most currencies to remain range bound as the market sets up for tomorrow's US report.