CAD appreciates as traders react to yesterday's BoC announcement

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

US Dollar             1.2500-1.2600

Euro                     1.3650-1.3750

Sterling                1.6425-1.6525

WTI Oil (opening level) $103.20 (Oil price continues to edge higher)

The US Dollar Index is marginally weaker this morning as the Euro jumped higher on the expectation that the European Central Bank will announce at their policy meeting this morning, they will increase the amount of stimulus they are withdrawing from the financial system which will eventually lead to an interest rate hike later in the year. This will be the last central bank to acknowledge that inflation is running much hotter than anticipated and needs to be brought under control.

The Canadian Dollar had a strong session yesterday and into the overnight session as the Bank of Canada announced a 0.5% increase to their key lending rate which now stands at 1% and is their biggest interest rate hike since 2000. The Bank also announced that they would start selling the bonds that they were buying during the pandemic which will also have the effect of pulling money out of the financial system and diving commercial interest rates higher. USD.CAD fell from a high of 1.2670 (0.7893) to trade at a low of 1.2540 (0.7974) overnight so a great start to the day for the Loonie.

On the calendar today we get the US Retail Sales report for March so markets will be watching for growth in the US economy, after a strong day yesterday stocks are again showing a positive start to the day so we may see the US Dollar give back some strength as has been the trend for the last few days.