US Dollar loses some strength as markets react to comments from Federal Reserve Chair

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

US Dollar             1.2600-1.2700

Euro                     1.4850-1.4950

Sterling                1.7300-1.7400

The US Dollar Index is weaker this morning as the markets react to more dovish comments from Fed Chair Powell on Friday. While he indicated as expected that the Fed will begin to taper back their stimulus program later this year, he was a little less committal on when they would start to increase interest rates. He cited what appears to be a worrying slowdown in consumer spending as a sign that the recovery may be starting to slow because of the increase in the Delta variant. The Euro was the biggest winner from the speech as it jumped to trade over 1.1810 which was a three-week high for the currency pair.

The Canadian Dollar was able to make some small gains against its Southern neighbor as USD.CAD opens the week at the 1.2610 (0.7930) level so for the moment it as been able to hold its own. Markets today will be watching the price of oil and gas as they await to see how much destruction was brought to the infrastructure in the Louisiana area as a result of Hurricane Ida. It looks like a lot of the State is without power this morning and if the oil refineries in the area are offline for a significant period of time look for the oil price to jump and the Canadian Dollar should benefit.

Nothing of note on the calendar today, we do get Canadian GDP tomorrow to close out the month of August which will help give the Loonie some direction and on Friday we get the US Employment report for August. With everything going on we could see some volatility come back to the FX markets.