New Zealand Cuts Rates as Global Inflation Cools: More Easing Expected Ahead

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

US Dollar        1.3650-1.3750

Euro                 1.5050-1.5150

Sterling            1.7550-1.7650

WTI Oil (opening level) $76.70

The US Dollar index is lower this morning and is at the lowest level it has seen since January of this year. All market eyes are awaiting the July inflation report where it is expected that the annualized inflation rate fell to 3% and the Core inflation rate fell to 3.2%. Today's direction of both the US Dollar and the stock market will depend on what the inflation number is and then longer-term the reaction from the US Federal Reserve in September.

 In other overnight Central Bank News the Reserve Bank of New Zealand announced an interest rate cut overnight and highlighted more cuts are coming. In the UK the latest inflation report came in better than expected which increased the chances of an interest rate cut by the Bank of England.

The Canadian Dollar is much stronger against its Southern neighbour overnight with USD.CAD dropping to trade near the 1.3700 (0.7299) level where it opens the day. However it is a good news/bad news scenario as the Loonie lost significant ground to both the Euro and Pound so this round of overnight strength in the Canadian Dollar is not a result of any changes in the prognosis for the Loonie but instead just a reaction to weakness in the US Dollar, US Dollar buyers should still consider buying on any further dips in the rate.

 After another strong day yesterday, stocks are poised for a flat opening as they await the inflation report. The monthly inflation report should come in at 0.2% which will be higher than last month's drop of 0.1% but would still show the Fed a declining rate of inflation and allow them to cut rates in September.