CAD has recovered some of its earlier losses

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

US Dollar             1.2700-1.2800

Euro                     1.4400-1.4400

Sterling                1.6950-1.7050

The US Dollar index is steady this morning as currency markets keep an eye on the expanding number of virus cases and react to comments yesterday from Fed Chair Powell.

The number of Omicron cases continue to expand across the world but Europe has been especially hit hard by this new strain. In Belgium hospitalizations have reached a pandemic high and in Germany the Parliament is holding a vote to make vaccinations mandatory which if passed will result in massive civil unrest. The Euro at the moment is holding its own but surely will come under pressure in the coming weeks if the virus runs out of control. Experts are saying that it is too early to say whether the symptoms of Omicron are to be mild and more time is needed to properly evaluate the effects, this strain will be front and centre in financial markets for a while.

The other big issues on the mind of currency traders at the moment is of course when the Federal Reserve will finally increase interest rates to fight inflation. Yesterday in comments to Congress Fed Chair Powell said it was time to remove the term "transitory" when describing inflation and that price pressures would be present in the economy for a while yet. Markets are now expecting an interest rate hike in May which is earlier than first expected and will continue to support the US Dolllar.

The Canadian Dollar recovered some of its earlier losses yesterday on the back of a slightly higher oil price and a GDP report that showed the economy growing at a faster rate than first thought. The economy grew at a 5.4% annualized rate over the third, hopefully the new strain of the virus does not slow that down. USD.CAD which had been trading above 1.2800 (0.7812) level fell back and we open the day near 1.2750 (0.7843).

We may get some currency volatility this morning from an announcement at the planned OPEC meeting where they are expected to report that they will not go ahead with their planned increase in output. At the moment the Dow Jones is pointing some 300 points higher so the US Dollar should remain supported and the Canadian Dollar remain range bound.