American dollar gains more strength as investors continue move to safe-haven assets

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

US Dollar             1.2850-1.2950

Euro                     1.3075-1.3175

Sterling                1.5550-1.5650

WTI Oil (opening level) $86.43

The US Dollar index is marginally stronger this morning as the index has now recovered all of its losses after Friday's weaker than expected inflation report. Investors keep returning to the US Dollar for safe haven security whenever poor economic data is released and this morning it was the UK inflation data that showed inflation in that region hit 10.1% in July, the highest level since February of 1982. Investors are betting that UK interest rates will double over the next year and the economy will continue to move into a recession.

The Canadian Dollar has had a up and down 24 hours, yesterday saw the July inflation report come in at 7.6% which is the first drop in inflation on over a year. On the release of the report USD.CAD fell to trade at 1.2835 (0.7791) but has since lost ground to the stronger US Dollar overnight and now trades back above the 1.2900 (0.7752) level. This inflation report will easily give the Bank of Canada enough ammunition to increase interest rates next month, the question will be by how much will they increase? I think if the go by 0.75% then you may see a small boost in the value of the Loonie but for the moment the Loonie should continue to range trade.

The US Dollar may get another boost today as the market gets set for the release of the US Federal Reserve meeting minutes from last month. Investors will be watching to see the committee's resolve to continue with their plan for large interest rate hikes in the face of a slowing economy, any sign that they are wavering in their plan to tackle inflation will hurt the US Dollar. If they sound committed to further significant interest rate hikes then the Dollar should garner some more strength. Ahead of this release we also get the July Retail Sales report which will highlight the current situation with the US economy.