Euro surges as the ECB hints higher interest rates this year

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

US Dollar             1.2450-1.2550

Euro                     1.3550-1.3650

Sterling                1.6250-1.6350

WTI Oil (opening level) $103.17 (Oil price is unchanged overnight)

The US Dollar Index is again marginally weaker this morning but the outlook for the Greenback remains positive as US 10-year interest rates touched 3.0% yesterday before pulling back a little overnight. The Dollar was held in check by a slightly stronger Euro which moved higher on comments from ECB officials that seem to indicate higher interest rates are on the way for the EU later in the year.

The Canadian Dollar had a strong day yesterday as USD.CAD fell to trade at a low of 1.2460 (0.8025) before pulling back a little higher to start the morning session. The driver was of course the Canadian inflation report that showed prices rising in March by 6.7% which was much higher than economists were expecting and was a full percentage point higher than the February number which was a 30-year high. I would think this number will lead the Bank of Canada to a 0.5% interest rate hike at their next meeting on June 1st which should continue to support the Canadian Dollar.

With just secondary US data on tap today and a stock market that looks set to have a strong day the US Dollar should remain supported, for USD.CAD I would like to see a break below the 1.2400 (0.8065) level before I start to think that the Loonie can extend these recent gains.