Bank of Canada holds key rate steady at 5%

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

US Dollar        1.3700-1.3800

Euro                1.4500-1.4600

Sterling           1.6650-1.6750

WTI Oil (opening level) $83.99

The US Dollar index is marginally stronger this morning as the Dollar continues to benefit from higher treasury yields and the expectation that higher interest rates will remain in place for longer than expected. The big mover overnight was the Australian Dollar where that currency fell quite a bit after initially jumping on reports of higher-than-expected inflation and fears of another interest rate hike in that country.

The Canadian Dollar is front and centre this morning as the Bank of Canada releases its latest interest rate decision and also its Monetary Policy Report. It is widely expected that the Bank will hold interest rates at 5% for the second month in a row, the market will be looking for any statements from the Bank on what their view on inflation and the economy is and will react accordingly. Right now, our growth rate is almost flat any future rate hikes will surely push it into recession, an overly negative view on the economy will most likely hurt the Canadian Dollar.

Stocks were mixed yesterday with New York higher and the TSX lower, Toronto was led lower by a big drop in financial stocks as the market is reacting to possible poor performance from the banks in a high interest rate environment. The market is poised to open a little higher this morning but where it goes will depend on what the Bank of Canada does.