Increasing interest rates seem to be decelerating inflation at the cost of slowing Canadian economy

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

US Dollar        1.3675-1.3775

Euro                1.4950-1.5050

Sterling           1.7150-1.7250

WTI Oil (opening level) $77.21

The US Dollar index is marginally lower this morning in a quiet overnight session. Once again investors continue to put pressure on the US Dollar as the expectation that US interest rates will fall next spring continue to weigh on the Dollar. The Euro is up around 60 points and the Pound has gained about 100 points over the last 24 hours so clearly the Greenback is trading with a weak bias.

Unfortunately, the Canadian Dollar cannot make any gains against the US Dollar at the moment as USD.CAD has remained relatively static near the 1.3725 (0.7286) level and as such it is losing significant value to both the Euro and Pound at the moment. The Loonie will be front and centre today as we get the October inflation report and it is expected that the year-over-year rate of inflation will have fallen to 3.2% down from 3.8% in September. Higher interest rates seem to be slowing the rate of inflation but at a big cost of slowing the economy.

In addition to the Canadian inflation rate we also get the minutes of the last Federal Reserve meeting and there should not be any real big surprises. I think the committee will reiterate that they will continue to watch the data when it comes to inflation and the economy and will adjust US interest rates as needed. After another positive day yesterday, stocks are showing a small decline on the opening but may still have a strong day in the end, look for the US Dollar to remain under pressure.