USD index rises as Biden's team doesn't plan to promote a policy of weaker dollar anymore

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

US Dollar         1.2750-1.2850

Euro                 1.5350-1.5450

Sterling            1.7250-1.7350

The US Dollar Index is stronger this morning as the Greenback continues to reverse its trend from late last year when markets were expecting a weaker US Dollar. The Dollar is reacting to Friday's report that showed US Retail Sales weakened for the third month in a row adding fuel to the fire that the US economy's recovery may be slowing in what looks to be the toughest month's for virus cases around the world just ahead. In addition, the markets are reacting to the expected testimony from Biden's nominee for Treasury Secretary (former Fed Chairperson) Janet Yellen who is expected to confirm the administrations policy of letting the market determine the value of the US Dollar and will not promote a policy of a weaker US Dollar going forward. This is the exact opposite what the Trump administration wanted so it will be interesting to see how it plays out but the US Dollar may continue to show signs of strength in the near future.

The Canadian Dollar felt the brunt of the stronger US Dollar last night with USD.CAD moving to a high of 1.2790 (0.7818) before dropping back a little. The Loonie did perform a little better against the other currencies so all was not lost but it is still further evidence that at the moment there is little domestic influence on the Canadian Dollar and that it still trades at the mercy of our Southern neighbour. Hopefully this will change with the number of economic reports coming out of Canada this week.

Today will be a quiet day on the markets as it is a holiday in the US but this should be a big week for the Canadian Dollar as we get a slew of economic activity being reported and we also get the Bank of Canada interest rate policy announcement along with their Monetary Policy report. It may be a prudent strategy to cover off some of your short-term requirements ahead of the Bank's report on Wednesday as we should see some added volatility for the Loonie throughout the week.