US Dollar Index Gains as Fed Hints at Steady Rates; Yen Hits Historic Low

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

US Dollar        1.3650-1.3750

Euro                 1.4600-1.4700

Sterling            1.7300-1.7400

WTI Oil (opening level) $81.10

The US Dollar index is marginally stronger this morning as comments from Fed officials yesterday that stated the Fed may keep rates steady for longer than expected to fight stubborn inflation. Both Australia and Canada yesterday reported higher than expected inflation numbers so clearly inflation is proving very tough to get to the 2% level that Central Banks like to see.

In other overnight news USD.JPY traded above 160.00, the last time the Yen was this week was December 1986 so I am pretty sure we will see further Central Bank interventions shortly which may push the Greenback lower in the shirt-term.

The Canadian Dollar is for the most part unchanged this morning as yesterday the May inflation report came in much higher than expected at a year-over-year rate of 2.9%. I would guess that now takes any interest rate cut in July by the Bank of Canada off the table which should lend some support to the Loonie in the short-term. The Loonie initially strengthened after the announcement but as we have seen in the past it was not able to hold onto that strength, USD.CAD opens the day near the 1.3650 (0.7326) level. We will need to hear from the Bank of Canada in the coming weeks to get a sense of what they are thinking on interest rates before the Loonie will stage another rally.

Stocks had a down day yesterday and are pointing lower to start today, there is nothing of note on the calendar today so currency markets should range trade ahead of tomorrow's US Inflation data.