It is expected that the Fed will continue to fight high inflation and increase interest rates in order to hide panic about the current banking crisis

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

US Dollar         1.3750-1.3850

Euro                 1.4500-1.4600

Sterling            1.6550-1.6650

WTI Oil (opening level) $70.33

The US Dollar index is higher this morning as the US inflation numbers released yesterday show that while inflation is moderating in the US it is still problematic and for the Fed not to increase interest rates this month would indicate to investors that they have hit the panic button on the current banking crisis. With that being said the banking crisis is not going away with Credit Suisse Bank stock dropping more than 20% yesterday this morning and dragging European stocks lower, the Dow Jones is pointing lower some 550 points on the opening so after yesterday's pullback it is going to be another tough day on the markets.

The Canadian Dollar was able to pick up some gains yesterday after the US inflation report but now that investors are thinking that the Fed will increase interest rates next week the Loonie gave back all of that strength and USD.CAD opens the day near the 1.3760 (0.7267) level. Our Dollar has been able to hold onto its own against the other currencies but both Sterling and Euro and weaker on the Credit Suisse news as is the entire European Banking index which won't offer much support for those currencies in the short-term.

We get Retail Sales in the US today so we will get another look at how the US economy is performing with higher interest rates in place but for the most part all investors will continue to worry about possible contagion in the US Banking industry and the meltdown in the stock market. On the positive side the bigger US banks are showing that they are seeing a massive inflow of deposits so the contagion may be limited to smaller banks.