GBP index takes off as there is a possibility of negative interest rates in the UK

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

US Dollar         1.2750-1.2850

Euro                 1.5300-1.5400

Sterling            1.7450-1.7550

The US Dollar Index is marginally stronger as overnight the index hit levels last seen in early December. Discussions in the US Congress continue over the size of the US stimulus package as Democrats are adamant that the size of the program remains at $1.9 Trillion amounting to $1400 for every eligible American.

The big currency move overnight happened a short time ago as GBP.USD moved from a low of 1.3570 to trade at 1.3670 in just a few minutes as the Bank of England published the minutes from their policy meeting and make the statement that commercial bank CEO's should get ready for the possibility of negative interest rates in the next six months. Sterling took off on this news and should remain strong as such a program would drive money away from the banks and into the UK stock markets. Look for this idea to develop more over the next few months.

In Italy, former ECB Governor Mario Draghi has agreed to try and lead a new coalition government for the country. If he is successful then that should bring some stability to Italy had help the Euro in the short-term.

The Canadian Dollar lost a little ground to the US Dollar as USD.CAD opens the day at the 1.2810 (0.7806) level, still close to the 1.2700-1.2800 range, I would want to see a clean and sustained break higher for USD.CAD before saying that the currency pair has broken out of the old range. The Loonie did pickup a little strength against the Euro so buyers of Euro should keep an eye on that.

With just some US secondary data on tap for today look for currency markets to remain in current ranges ahead of tomorrow's employment reports. Stocks are looking flat on the opening so perhaps too they are returning to some sense of normality.