USD index falls as markets react to a big tech stocks drop

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

US Dollar         1.2050-1.2150

Euro                 1.4700-1.4800

Sterling            1.7050-1.7150

The US Dollar Index is marginally weaker again this morning as the market continues to react to last week's poor US Jobs report and a big overnight drop in tech stocks that look set to drag US and Canadian equity markets much lower this morning. The prospect of much higher inflation is also weighing on markets this morning as the US CPI is expected to show a full percentage point jump when it is released tomorrow. The Fed has said that it will allow inflation to run hot in the short-term but we will soon see what their resolve is, especially if the price of gasoline starts to move a lot higher.

EUR.USD reached a two and a half month high to trade at 1.2175 overnight as optimism in Germany about a strong recovery is underway, a study of investors sentiment showed that investor optimism reached levels last seen in 2000 so this is very positive news for the Euro.

The Canadian Dollar and other commodity currencies continue to benefit from the weaker US Dollar as USD.CAD opens the day at the 1.2100 (0.8264) level. The currency pair is off of its overnight lows but still for the moment the Loonie is able to hold onto recent strength, tomorrow's US Inflation report will certainly add in some more volatility to Canadian Dollar trading so US Dollar buyers may want to take some advantage of these levels.