USD index falls as the battle between "Main Street" and "Wall Street" continues

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

US Dollar         1.2750-1.2850

Euro                 1.5500-1.5600

Sterling            1.7550-1.7650

The US Dollar Index is marginally weaker this morning after a volatile overnight session that saw the Greenback move around quite a bit in response to the turmoil that is going on in the global stock markets. Overall, the US Dollar is picking up some strength as the battle between "Main Street" and "Wall Street" continues to unfold in the US and push large hedge funds to the sidelines temporarily. Yesterday saw many hedge funds have liquidity issues as they were forced to close out massive short positions on companies that were perceived to be in trouble, this is the first time in history that small investors were able to work together to significantly move stocks and will for the short-term take these large hedge funds out of the short-selling game.

Yesterday was the Federal Reserve hold the line on interest rates and keep the stimulus program the same. Their statement said the US recovery had "moderated" and low interest rates will remain in place until the economic recovery is well underway.

The Canadian Dollar had a volatile overnight session with USD.CAD trading as high as 1.2870 (0.7770) before falling back this morning to trade at 1.2800 (0.7812) as I write. We can expect this type of volatility throughout the day as the stock market is pointing considerably lower and there are concerns that other stocks that have an over-all short position by investors will be targeted for purchase by these community forums.

The Loonie may see additional volatility around today's release of the Canadian December GDP report where the market is expecting a 0.4% increase in economic growth. Either way it is going to be a volatile day for the currency market as the stock market will be the main focus and currency traders will react accordingly.