American dollar points slightly lower ahead of the Federal Reserve meeting

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

US Dollar             1.2775-1.2875

Euro                     1.3450-1.3550

Sterling                1.6000-1.6100

WTI Oil (opening level) $107.10 (Oil price is up $3 from yesterday's opening level)

The US Dollar Index gave back some very slight gains overnight as the market awaits word from today's US Federal Reserve announcement on interest rates. The market is fully expecting the Fed to increase their interest rate by 0.5% to the 1% level, they are also expected to start reducing the size of their balance sheet by selling off the bonds they bought during the pandemic which will have the effect of pulling money out of the financial system. Of more importance will be the speech by Fed Chair Powell following the announcement on what he thinks the outlook for the US economy is going forward. the market is expecting further interest rate hikes later in the year and it is likely that US interest rates could hit 3.5% by the end of 2022 which will all help to continue pushing the US Dollar Index higher.

The Canadian Dollar was able to extend some small gains overnight so once again USD.CAD bounced lower after trading near the 1.2900 (0.7752) level. The Loonie also picked up some small gains against the other currencies but the direction for the Loonie today will of course depend on what the Federal Reserve will do, it should be a busy and volatile afternoon.

Stocks finished slightly higher yesterday and are pointing to a strong opening but if Powell indicates more very aggressive interest rate hikes in the future, then stocks will get crushed again and the Dollar will trade much higher.