The U.S. dollar may suffer after the Fed’s February interest rate announcement

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

US Dollar        1.3350-1.3450

Euro                1.4555-1.4650

Sterling           1.6500-1.6600

WTI Oil (opening level) $79.46

The US Dollar Index is marginally higher this morning but the Dollar index will close lower for the fourth straight month with the index falling some 11% since September of last year. There is most likely some squaring up of long US Dollar positions ahead of the Federal Reserve announcement tomorrow where it is expected that the Fed will increase interest rates by 0.25% and may indicate that hikes are coming to an end as inflation moderates. If this is the case then the Dollar will suffer and stocks should jump.

The Canadian Dollar is weaker this morning as USD.CAD opens higher near the 1.3450 (0.7435) level just ahead of the Canadian Decembers GDP report. As mentioned yesterday it is expected that the economy grew by a measly 0.1% which is getting very close to negative growth and could signal a recession is on the horizon.

As previously stated, the GDP report for December has come in at 0.1% and USD.CAD has started to move a little lower hitting the 1.3425 (0.7449) level. We will have to see what the January number brings before we can confirm if Canada is indeed moving into recession.

After a tough day yesterday, stocks are again pointing lower this morning as markets reset before the Fed's announcement tomorrow, the US Dollar should remain supported ahead of the announcement when volatility will again kick in and we will see what happens with the markets.