US Inflation report has made a huge impact on the currency market

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

US Dollar         1.2050-1.2150

Euro                 1.4600-1.4700

Sterling            1.7025-1.7125

The US Dollar Index is stronger this morning as the Dollar reacts to the big drop in stocks yesterday and a fuel crisis that is driving gasoline prices in the US much higher and causing supplies issues along the east coast.

The big item of interest to markets this morning will be the US Inflation report for where economists are expecting an April annualized inflation rate of 3.6% which will be the highest inflation the US has seen in many years, I thought I would hold back this morning’s commentary to see what effect the inflation report is having on the currency markets.

Just ahead of the release of the report USD.CAD is trading at 1.2078 (0.8280) which is the currency pairs lowest levels in years.

POST INFLATION REPORT

The Actual year over year US April inflation rate came in at 4.2% with the Core inflation report coming in at 3%, both of these readings have come in much higher than expectation. The US Dollar has started to rally significantly with EUR.USD dropping to 1.2090 and GBP.USD falling to trade at 1.4095 which are both significant drops.

The Canadian Dollar also has given up some strength as USD.CAD hits a new intraday high of 1.2110 (0.8258), The Loonie is faring better than some but it looks like the US Dollar will remain strong during today's session.