US Dollar Stabilizes After Fed Rate Cut; Chinese Stimulus Boosts Yuan, Loonie Gains

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

US Dollar        1.3475-1.3575

Euro                 1.5000-1.5100

Sterling            1.8000-1.8100

WTI Oil (opening level) $71.92

The US Dollar Index is marginally weaker this morning but looks like it is starting to stabilize after the Fed rate cut. In big overnight news, the Chinese Government announced a wide sweeping economic stimulus plan that included increased support for the housing market, easing of lending requirements and a 50 basis point cut to reserve requirements. All of this was to help an economy that had been slowing over the last year and immediately the Asian market saw a jump in stocks and the value of the Chinese Yuan so it was so far well received by the markets.

The Canadian Dollar was able to extend some strength against the US Dollar as USD.CAD fell to trade near the 1.3500 (0.7407) level. The Loonie has made steady but small gains over the past week but I am still not sure that it can make big progress until we see an improving economic picture here in Canada.

Nothing major on the calendar today, we do get some US secondary data and a speech by BOC Governor Macklem today but I doubt it will move the market much. Stocks are pointing to a small gain on the opening so the currency markets should remain range bound throughout the day.