US Dollar gave back some of the gains it had made

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

US Dollar         1.2550-1.2650

Euro                 1.4750-1.4850

Sterling            1.7300-1.7400

The US Dollar Index is marginally weaker this morning as it gave back some strength from yesterday when the US 10-year interest rate jumped to a high of 1.78%, interest rates fell overnight and the US Dollar gave back some of the gains it had made. The US Dollar continues to surge on the expected recovery of the US economy and from an expected rise in inflation brought on by massive government stimulus in the face of the epidemic. This week President Biden is expected to announce an 8-year, $4 Trillion dollar infrastructure package that will be financed over 12-years by a big corporate tax increase from 23% to 28%, I can feel the Republicans wrath starting to boil over at this prospect all the way up here in Canada.

The Canadian Dollar continues to move back and forth around the 1.2600 (0.7937) level with no real sense of direction. It reached a high of 1.2640 (0.7911) yesterday before pulling back so for the moment range trading should be the order of the day. The Loonie was able to pick up some small gains against the Euro and Pound so buyers of these currencies should look to this type of movements to pick some up.

We get the Canadian GDP report for January this morning and it is expected to show a small improvement over December which would be a win for Canada as most of the country was in lockdown for the entire month. A strong number and USD.CAD should fall back towards the 1.2550 (0.7968) level.