USD index weakens as traders cash out profit from last week's rally

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

US Dollar             1.2700-1.2800

Euro                     1.4200-1.4300

Sterling                1.7050-1.7150                           

The US Dollar index is marginally weaker this morning as traders take some profit after the Greenbacks strong run last week. The interest rate focus will move this week to both the Bank of England and the European Central Bank as on Thursday both institutions report on interest rates. In the UK, the BOE is expected to increase interest rates for the second time in a few months while in Europe the ECB is expected to keep interest rates at current levels and continue to provide stimulus to their economy.

Russia continues to ramp up the pressure on Ukraine as the US is reporting that they moved more troops and blood supplies to the border with Ukraine over the weekend, until this gets resolved one way or the other markets will remain nervous over the next little while. History has a great way of repeating itself and right now there is a great film on Netflix called Munich the Edge of War which details the negotiations between England and Germany in 1938 over the Sudetenland, very similar to what is happening today.

The Canadian Dollar was able to pick up some strength against the US Dollar this morning but that of course was after a tough previous week. USD.CAD opens the day at the 1.2750 (0.7843) level so a little lower than its close on Friday. The Loonie also made some small gains against the other currencies so we will see if it can extend those gains.

Another busy week on the calendar this week so volatility will remain in place. Up today we get some inflation data from Canada in the form of raw material pricing, tomorrow we get the Canadian GDP report for November and then of course later in the week we get Central Bank reports. We finish the week with the employment reports for both Canada and the US, so it will be a very busy week. Stocks are again pointing lower this morning so look for the US Dollar to remain supported throughout the day.