USD index falls following the US Federal Reserve announcement

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

US Dollar         1.2375-1.2475

Euro                 1.4800-1.4900

Sterling            1.7275-1.7375

The US Dollar Index is marginally higher this morning but that was only after it was much weaker yesterday following the US Federal Reserve Announcement. As expected, the Fed did not change its interest rate policy and in his press conference and Chairperson Powell stated that interest rates will remain low for sometime to come and that the inflation rate will be allowed to run above target for a period of time as the economy recovers. He also maintained that the US economy is expected to grow 6.5% in 2021, the largest GDP growth since 1984 and that inflation would run to about 2.4% and stay there for a couple of years. The Dollar recovered some of the momentum it lost yesterday during the overnight session as investors pushed the 10-year yield a little higher so markets may be a little skeptical of the Fed policy at the moment.

USD.CAD had a great day yesterday as the rate fell to a low of 1.2375 (0.8080) before pulling back this morning in lockstep with the US Dollar. The pair opens the morning session at 1.2430 (0.8045), it will be interesting to see if the Loonie can generate any momentum of its own now but for the short-term it will still follow in the path of the |US Dollar.

Nothing of note on the calendar for today so look for USD.CAD to settle in the 1.2400-1.2500 range as it awaits the next big move for both the US Dollar and US interest rates.