USD index is weaker as investors react to the FED's rate hike

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

US Dollar             1.2600-1.2700

Euro                     1.3950-1.4050

Sterling                1.6675-1.6775

USD.RUB (opening level) 103.00(Ruble a little weaker this morning

WTI (opening level) $100.40(a jump of $4 in the oil price from yesterday)

The US Dollar index is marginally weaker this morning as the markets reacted to the quarter point interest rate increase from the US Federal Reserve. In their statement they fully expect to increase interest rates a further 6 times this year but also said that it will take at least two years before inflation returns to the 2% pre-pandemic levels. The worry now that markets have to digest is that the global economy may have a period of Stagflation (a period of high interest rates and high inflation), such a situation would be a disaster for the global economy and surely cause a recession.

Further on the interest rate front, the market is waiting for the decision from the Bank of England this morning where it is expected that they will once again increase interest rates for the third consecutive time.

The Canadian Dollar picked up some small overnight gains against the US Dollar as it opens the day below the 1.2700 (0.7874) level, but it did lose some ground to the other currencies overnight so not a total success story. The Loonie was also helped yesterday by the February inflation report that saw annualized inflation in Canada reach a 30-year high at 5.7%, this is now 11 straight months that inflation has run above the Bank of Canada's 1%-2% target range so we can easily expect more interest rate hikes from the BOC.

Nothing coming out on the peace talks this morning so the war continues, on the ruble front Russia did make a payment overnight of its sovereign debt in US Dollars so it has avoided default for the moment. Stocks are pointing lower this morning after a strong day so the US Dollar may trade a bit stronger.