US Dollar Index Drops as Inflation Hits Lowest Rate Since 2021, Boosting Speculation of Rate Cuts

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

US Dollar        1.3575-1.3675

Euro                 1.4775-1.4875

Sterling            1.7600-1.7700

WTI Oil (opening level) $82.15

The US Dollar index is weaker to close out the week as the US June inflation report came in weaker than expected. The actual inflation rate fell to its lowest rate since 2021 at 3.0% down from 3.1% and the Core rate also fell 0.1% to trade at 3.3% down from 3.4%. The Dollar reacted accordingly as the index fell across the board, EUR.USD rose nearly 50 points, GBP.USD rose nearly 70 points and USD.JPY fell to trade neat 158.00 at one point with the Bank of Japan taking advantage of the weaker dollar and once again intervening in the FX markets to support the Yen. These numbers will increase investor speculation about a possible interest rate cut in September which will keep the US Dollar on the back foot.

 The Canadian Dollar was able to make some small gains against the US Dollar but it is much weaker against both the Pound and Euro. USD.CAD fell to trade below 1.3600 (0.7353) at one point yesterday but it was not able to hold onto those gains and the Loonie retreated during the session. With the expectation of another Bank of Canada cut on the horizon it will be difficult for the Loonie to hold onto any strength.

 Stocks are pointing higher to start the day and they should be able to build on their momentum of late, markets will start looking at what a Trump presidency means for the economy as the US election has denigrated to nothing more than a referendum of Biden's mental ability, right now it looks like the Democrats have handed the presidency to Trump.