How Canadian dollar became the star of the currency world

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

US Dollar         1.2450-1.2550

Euro                 1.5000-1.5100

Sterling            1.7325-1.7425

The US Dollar Index is again marginally lower this morning as stocks rebounded yesterday and the market focus shifted this morning to the announcement from the European Central Bank that they were keeping interest rates at 0% and indicated that they would watch the economic data before deciding to reduce the stimulus program supporting the Euro Zone economy. EURO.USD has jumped slightly in the past hour so this announcement is weighing more on the Euro than the further virus restrictions announced by the German Government to combat a big jump in cases that like Ontario are overwhelming the health care system.

The Canadian Dollar was the star of the currency world over the last 24 hours as USD.CAD fell over 100 points on the announcement from the Bank of Canada that they would curtail the amount of bonds that they buy each month from $4 Billion to $3 Billion. Citing the recovery in both the Canadian and Global economies the Bank of Canada is the first Central Bank to announce the beginning of the end for economic stimulus and now the Canadian market will be looking at higher interest rates down the road as the program comes to an end. Yesterday's inflation report showed annualized inflation reached 2.2% in April which is above the Bank's target of 2% annual inflation, they will let this rate run hot for the rest of this year and slowly start to increase interest rates to bring the rate back in line with their plan next year. USD.CAD reached a low of 1.2470 (0.8020) before pulling back a little higher, we will see over the next few days if it can keep up the momentum.