USD index falls as interest rates in the US reach a one-year high

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

US Dollar         1.2575-1.2675

Euro                 1.5275-1.5375

Sterling            1.7600-1.7700

The US Dollar Index is marginally weaker this morning as both the Euro and Pound have moved higher as interest rates in Germany and the US have hit a one-year high, investors continue to focus on inflation creeping into the world's largest economies. Markets will continue to watch for inflation over the next few months but will also continue to focus on the roll out of vaccines and the extent of the recovery in the US. If inflation continues to grow then the US Dollar should benefit as investors will buy up US Dollars to invest the proceeds in US bonds.

The Canadian Dollar had a mixed night as USD.CAD moved higher to open the overnight session but as the US Dollar gave back some early gains the Loonie picked up some steam and USD.CAD opens the week at the 1.2625 (0.7921) level. Once again nothing on the immediate horizon that will bring us a prolonged bout of Canadian Dollar strength, the Loonie still moves around on developments South of the border and should do so for a while.

Nothing of great note on the calendar this week, Fed Chair Jerome Powell does testify to Congress starting tomorrow so markets will look to see what he says on the US economic recovery. For today it looks like stocks will have another down day so look for the US Dollar to rally off of its overnight lows especially if interest rates continue to rise in the US.