US Dollar Strengthens as Price Rises and Inflation Fuel Fed Rate Hike Expectations

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

US Dollar        1.3600-1.3840

Euro                 1.5780-1.6030

Sterling            1.8240-1.8500

WTI Oil (opening level) $65.73

The CAD/USD is opening at 1.3728 ( 0.7284 )

·    The US Dollar maintains a moderate bullish trend against the Canadian Dollar, buoyed by the cautious market mood.

·    Higher US inflation and hopes of higher Fed rates for longer are underpinning the US Dollar.

·    The recent decline in Oil prices is adding negative pressure on the commodity-sensitive Loonie.

The USD is trading in a narrow range near 1.3720-30 against the CAD, with downside attempts limited above 1.3700 and on track to close a four-day winning streak, as hotter US inflation figures have hammered hopes of Federal Reserve rate cut in the near-term

On Tuesday, data from the US Bureau of Labour Statistics showed that consumer inflation accelerated in June, displaying generalised price rises in a wide range of products, especially on imported goods. These figures confirm that Trump’s tariffs are starting to filter through the economy and dampen expectations of Fed cuts. The thought is that interest rates are to kept at current levels to assure that inflation returns to the banks 2% target level.