USD index continues to lose its last week's gains

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

US Dollar         1.2250-1.2350

Euro                 1.4650-1.4750

Sterling            1.7100-1.7200

The US Dollar index is weaker this morning as overnight markets reacted to Fed Chair Powell's testimony to congress yesterday. In his address and answers to questions Powell basically kept to the script that they the economy is recovering at a steady pace, inflation is running hotter than expected but it is most likely temporary and it will be some time before interest rates are hiked in the US. Markets were looking for any signs that the Fed was changing course and as they have indicated yet again that they are staying on plan the US Dollar gave back quite a bit of the strength it picked up during the past week.

The Euro was able to extend some significant gains as in addition to the Powell comments that weakened the US Dollar European data showed that overall business growth grew at its fastest pace in the last 15 years in June as most countries came out of lockdown.

The Canadian Dollar was able to take advantage of the weaker US Dollar as USD.CAD dropped overnight to open the day at the 1.2280 (0.8143) level which is its lowest level in a week. The Loonie also picked up some small gains against the other currencies overnight so overall a strong performance for our Dollar.

We just have some secondary US data to be released this morning in the form of the US Durable Goods production numbers for May, I would expect USD.CAD to remain range bound as stocks are set to open a little higher and the oil price remains elevated, now that Powell has once again expressed the Fed's position market volatility should calm down.