Analyzing the Dollar's recent strength: key factors driving currency markets amidst GDP reports and Fed speculations

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

US Dollar        1.3550-1.3650

Euro                1.4625-1.4725

Sterling           1.7100-1.7200

WTI Oil (opening level) $82.49

The US Dollar index is marginally weaker this morning but once again that is only after a strong day yesterday. The Dollar had a positive day yesterday as a Fed official said that the inflation results were disappointing and there was no need to rush the first round of interest rate cuts. The Dollar will finish the quarter on a recent high and looks set to continue this strong run until the Fed affirms when interest rates cuts are coming.

The Canadian Dollar had a busy day yesterday as USD, CAD broke above the 1.3600 (0.7353) level yesterday before it fell to trade at 1.3585 (0.7361) this morning. This morning the Canadian market will be looking at the most recent GDP report (January) and it is expected to show a 0.4% gain which would be a little higher than the flat reading in December.

In addition to the Canadian GDP report we also get the US final 4th quarter GDP report and it is expected that the US economy grew at a rate of 3.2% which would slightly be lower than the early predications. Also on the calendar tomorrow is a key inflation reading in the form of Core PCE Price index which is an inflation measure that the Fed pays a lot of attention to and this is being released despite the markets being closed for the Good Friday holiday so if this number comes out different than the expected 0.4% increase then the currency market may get very volatile as banks will be running reduced staff. Make sure you get your orders in place to take advantage of any movement.