CAD continues its rally

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

US Dollar             1.2425-1.2525

Euro                     1.4150-1.4250

Sterling                1.6950-1.7050

The US Dollar index is marginally stronger this morning as US treasury bond yields continue to rise in the market. Overnight saw the 10-year treasury yield reach 1.88% and most investors are expecting it to reach 2.0% by March. Higher interest rates should keep the US Dollar strong.

In the UK, the Pound is a little stronger this morning as that economy reported its highest inflation rate in over 30 years. It id now expected that the Bank of England will increase interest rates soon as following on from the US Federal Reserve.

The Canadian Dollar continues to show some resiliency in the face of the stronger US Dollar as USD.CAD opens the day below the 1.2500 (0.8000) level. The Loonie may be getting some further strength on a report that stated the oil price could reach $100 a barrel later this year as the economy and demand continues to grow.

The Canadian Dollar will be front and centre today as we get the Canadian Inflation report for December, as I write the report has shown the year-over-year inflation rate has come in at 4.8% which is slightly higher than expectation. This report should benefit the Loonie as it will now be over to the Bank of Canada to see what they are going to do about inflation. As I am signing off USD.CAD is trading close to 1.2450 (0.8032).