US Dollar Surges to 3-Month High as Fed Signals Strong Economy, Dashes Hopes of March Rate Cut

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

US Dollar        1.3450-1.3550

Euro                1.4450-1.4550

Sterling           1.6950-1.7050

WTI Oil (opening level) $71.95

The US Dollar Index is much stronger this morning and in fact has hit a 3-month high as the markets reacted to comments from Fed Chair Powell yesterday in an interview with the show "60 minutes". He basically stated that he does not see a path to an interest rate cut as early as March and the Fed will wait to see what inflation is doing before they will consider an interest rate cut. Basically as we have seen for a while now as long as the US economy remains strong the Fed will keep interest rates high which will support the Dollar and put pressure on the stock market.

The US economy continues to produce strong numbers, on Friday the employment report showed over 300K jobs were created last month which was much higher than the expectation, these types of numbers just give the Fed the ammo they need to keep interest rates high and the dollar strong.

The Canadian Dollar is weaker this morning but it has fared better than a lot of the other currencies against the Greenback. USD.CAD climbed to trade near the top of the recent range as USD.CAD opens the day near the 1.3500 (0.7407) level but it actually picked up a little strength against the other currencies and this was in spite of a big drop in the oil price.

It is a quiet week on the calendar with the highlight being the Canadian employment report on Friday. After a down day on Friday stocks are looking to retreat further on the opening this morning so the US Dollar should remain supported throughout the session, investors will also keep an eye on the growing conflicts in the Middle East as they look set to escalate further, if the West were to attack Iran directly then I think you would see the markets take a turn for the worse and the Dollar soar once again.