CPI report outcomes: Consumer prices accelerated in March to 3.5%, the data shows inflation rise

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

US Dollar        1.3500-1.3600

Euro                1.4700-1.4800

Sterling           1.7200-1.7300

WTI Oil (opening level) $85.71

The US Dollar index is marginally weaker this morning as the market gets set for the March inflation reading out of the US. The expectation is for a 0.3% increase in the monthly inflation rate which would bring the yearly rate of inflation to 3.7% down from the 3.8% recorded last month. A higher number than expectation will push the Dollar much higher as the likelihood of a June interest rate cut will start to fade and a weaker reading should hurt the Dollar a little.In fact, the report showed that prices increased 3.5% from a year earlier, up from 3.2% in February, driven largely by the rising cost of rent and gasoline, according to the Labor Department’s consumer price index.

The Canadian Dollar picked up some small gains against the US Dollar overnight as USD.CAD opens the day near the 1.3560 (0.7375) level but it did lose some ground to the other currencies so overall the Loonie is range trading ahead of the inflation data. In addition to the inflation data the Canadian market hears from the Bank of Canada today and while it is expected that there will not be any changes to the current interest rates policy economists will be watching for any signs that the Bank is ready to start cutting to stimulate a very weak economy. Like other currencies the Loonie could have a very volatile day.

In addition to the CPI announcement, we also get the release of the minutes from the last Fed meeting which may give a clearer picture of what the Fed is thinking about the first interest rate cut. Stocks are poised for a small gain on the opening but that can change quickly after the inflation report.