USD Weakens Ahead of Fed Rate Announcement; Yen Volatility Raises Intervention Speculation

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

US Dollar        1.3600-1.3700

Euro                 1.4600-1.4700

Sterling            1.7050-1.7150

WTI Oil (opening level) $83.57

The US Dollar index is marginally weaker this morning as the market awaits the latest interest rate announcement from the Federal Reserve later this week. It is expected that the Fed will not cut interest rates this month and with the stubbornness of inflation it may actually be the end of the year before the Fed makes its first rate cut.

The big news from the overnight market was the volatility in Japanese Yen trading which saw USD.JPY hit a high near 159.50 and then fall off quite quickly to trade at 155.90 in a matter of minutes. It has not been confirmed but this type of movement certainly has all the characteristics of intervention by the Central Bank of Japan, the Yen has stabilized for the moment but we most likely will see another run on the Yen in the coming days.

The Canadian Dollar is a little stronger this morning as it continues to range trade, USD.CAD opens the day near the 1.3650 (0.7326) level and should remain stable ahead of what will be a busy week on the calendar. The Loonie also had a very volatile night against the Yen as CAD.JPY fell to trade at 114.40 from a high of 116.80.

It is quiet start to the calendar today but tomorrow we get the Canadian GDP Report for March and then on Wednesday to start May we get the US Federal Reserve announcement. Stocks are pointing a little higher on the opening but they too should remain volatile as the week goes on.