USD index shows first signs of rebound

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

US Dollar         1.2425-1.2525

Euro                 1.4800-1.4900

Sterling            1.7300-1.7400

The US Dollar Index is marginally stronger this morning in a quiet overnight session as markets are singularly focused on the Federal Reserve announcement on interest rates later this afternoon. While there is little or no chance of a change in interest rate policy the market will be looking at economic forecasts from the Fed and then await comments from Chairperson Powell on the latest jump in US interest rates and how will recent inflation change the Fed's stance going forward. My own feeling is that the Fed will just reaffirm their stance that low interest rates will remain in place for the foreseeable future and that inflation will be allowed to run higher in the short-term, if he comes out and says rates will not stay as low as first thought then you will see markets go crazy and the Dollar jump higher.

The Canadian Dollar is holding onto recent strength for the moment as USD.CAD opens the day at the 1.2470 (0.8019) level but the exchange rate is a little higher than its overnight lows so it looks to be range trading ahead of the Federal Reserve announcement. On the calendar today before the Fed announcement we get the Canadian Inflation report for February and the market is expecting an annualized inflation rate of 1.3% up slightly from January's rate of 1.1%. If we get a bigger jump than expected you may see the Loonie jump higher as the debate about higher interest rates in Canada may kick-off.

Yesterday saw the stock market have a tough day with both New York and Toronto lower and this morning they look to be flat on the opening but with the day's activity set to be volatile I don't think they will stay flat for long. It should be a busy an interesting day.