Euro takes a hit

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

US Dollar         1.2700-1.2800

Euro                 1.5400-1.5500

Sterling            1.7400-1.7500

The US Dollar Index is marginally stronger this morning as markets react to yesterday's comments from the International Monetary Fund which saw the fund downgrade growth in Europe while at the same time upgrade global growth on the back of the recovery in China. The Euro took the biggest overnight hit with EUR.USD falling from a high of 1.2175 to trade at 1.2105 as I write. Sterling is also lower but it did fair a bit better than the Euro.

The Canadian Dollar also lost some ground this morning as once again USD.CAD could not hold a break below 1.2700 (0.7874) and now opens the day trading in the middle of the recent 1.2700-1.2800 range. The Loonie also lost a little ground to both the Euro and Pound so clearly the Canadian Dollar is trading with a weak bias as the market awaits word from the US Federal Reserve later today.

With stocks pointing lower to start the day we should see the US Dollar rally a bit more on the opening and it is expected to remain strong until we hear from the Fed this afternoon. Markets are looking for the Fed to keep both the interest rates and stimulus plan at current levels but are looking to the Fed for guidance on the state of the US economy and when they plan to exit the low interest rate regime. I am sure they will also comment on the importance of the US Government's stimulus plan and the need for its quick passage to help push the US economy forward.