Canadian Dollar appreciates as investors react to yesterday's Federal Reserve comments

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

US Dollar             1.2625-1.2725

Euro                     1.4800-1.4900

Sterling                1.7350-1.7450

The US Dollar Index is lower this morning as the market reacts to yesterday’s news from the Federal Reserve that they will begin to unwind their stimulus program as expected in November, it looks like it will take a year to fully wind up the program and then they will look at the first interest rate hike late in 2022. Markets ahead of this announcement were very nervous about the possible collapse of Chinese property developer Evergrande but as that seems unlikely now that the Chinese Government is not expected to let them fail there was some room for the US Dollar to drop after the Fed announcement.

In an interesting note, 9 of 18 central bank policymakers indicated that they will increase interest rates next year and Norway leads the parade as they increased their key lending interest rate today pushing the Norwegian Kroner higher.

The Canadian Dollar was able to stem its losses from the past couple of days as USD.CAD dropped to open the day at the 1.2665 (0.7896) level after it looked very vulnerable when it traded above 1.2800 (0.7813) on Wednesday ahead of the Fed announcement. We may see a little more volatility today as we get the Canadian Retail Sales report for July and the market consensus is showing that it will show a fairly significant drop-in activity.