US Dollar strengthens amidst Fed meeting anticipation: will interest rate cuts follow?

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

US Dollar        1.3550-1.3650

Euro                1.4700-1.4800

Sterling           1.7250-1.7350

WTI Oil (opening level) $81.94

The US Dollar index is stronger this morning ahead of today's Federal Reserve meeting where the Fed is not expected to make any changes to their current interest rate policy and market watchers will be trying to determine when the first interest rate cut. Most watchers are expecting the first cut now to happen in July so we will see what the Fed says about that. UPD: Fed holds interest rates at 23-year high, indicates three cuts still coming this year.

In other FX news the Japanese Yen continues to free fall lower after the Bank of Japan cut interest rates yesterday, USD.JPY jumped to a rate of 151.70 which was last seen in October of last year. In other news the UK economy reported inflation fell more than the market was expecting so Sterling is trading with a weaker bias this morning as well.

The Canadian Dollar has had an up and down 24 hours, after the economy reported an inflation rate of 2.8% (slightly better than expectation), the Loonie traded weaker as USD.CAD hit a high above 1.3600 (0.7353) before pulling back most of its losses during the afternoon session but only to give back that strength this morning where the rate opens at 1.3590 (0.7358) ahead of the Fed announcement.

Stocks had a very strong day yesterday as the S&P set another record and the Dow Jones was up over 300 points. The market is pointing lower to start the day but of course everything will depend on the Fed and any hints they give about the looming interest rate cuts.