The FED is expected to hold interest rates steady and analyze how previous hikes affected the economy

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

US Dollar        1.3400-1.3500

Euro                1.4350-1.4450

Sterling           1.6550-1.6650

WTI Oil (opening level) $89.67

The US Dollar index is unchanged as the market awaits word later today from the US Federal Reserve on interest rates. It is widely expected that they will pause their hiking program and take a look and see what previous hikes are doing to the economy. The market will also be looking for forward guidance on interest rates from the Fed, as it stands now there is a 50/50 chance that the Fed will increase rates in November so the US Dollar should stay supported.

The Big mover overnight was the British Pound that fell about 80 points on an inflation report that showed inflation in that region dropped more than expected which now leads investors to think the Bank of England will slow the pace of their interest rate hikes. Sterling should remain trading with a weak bias.

Inflation in Canada took a big jump last month as the annualized inflation rate moved to 4.0% up from the previous reading of 3.3%. This is the second straight month that the inflation rate has risen, in June it hit a low of 2.8% so the likelihood of an interest rate hike here in Canada is picking up. The Loonie was able to extend some gains on this news with USD.CAD falling to trade at 1.3390 (0.7468), that move was quickly reversed as the oil price started to fall and USD.CAD has settled in at the 1.3425 (0.7449) level this morning. The oil price remains very volatile and we could see it moving the Canadian Dollar around quite a bit in the coming weeks.

After a tough day yesterday, stocks are poised for a positive opening but where stocks and the US Dollar end up all depends on what the Federal Reserve says and does today. Any further sign of an interest rate hike in November will push the Dollar higher and stocks will again tumble.