Canadian dollar appreciates as investors digest a better-than-expected inflation report

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

US Dollar             1.3375-1.3475

Euro                     1.4500-1.4600

Sterling                1.6375-1.6475

WTI Oil (opening level) $80.25

The US Dollar Index is marginally stronger this morning as North American markets kick off the week after yesterday's US holiday. Overall, the sentiment from the currency markets seems to be that with inflation moderating and the Fed slowing the pace of interest rates the US Dollar may have seen its peak and will slowly start to trade weaker over the coming months.

The Canadian Dollar traded weaker overnight with USD.CAD opening the day at the 1.3410 (0.7457) level just before the release of the December inflation report. The report showed that inflation in Canada is again moderating with a monthly drop of 0.5% (the largest monthly drop since April 2020) which brought the annualized inflation rate down to 6.3% from 6.8% in November. At the moment the Loonie is not reacting to the report as USD.CAD continues to trade near the opening levels of the day.

Stocks look set to open weaker this morning as they continue their see-saw action of late. With no other data on tap today currencies will most likely range trade as the market awaits on what the Bank of Japan does tomorrow.