Financial markets react to the U.S inflation data

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

US Dollar             1.2900-1.3000

Euro                     1.3150-1.3250

Sterling                1.5150-1.5250

WTI Oil (opening level) $89.15

The US Dollar index is again marginally lower this morning as the market get set for the US August Inflation report. It is expected that the y-o-y inflation will have dropped from the July high of 8.5% to trade at 8.1% while the measure of core inflation fell to 6.1%. It should be quite simple, if the inflation number comes in better than expected then stocks should jump higher and the Dollar will trade weaker and if it comes in higher than expectation the opposite will happen. I still don't think this number will change the mind of the Fed on their decision for next week, the market will still get a 0.75% interest rate hike but a series of drops in inflation may get them to start talking about lowering the pace of their hikes.

Update: Inflation rate came out at 8.3%. Stocks and crypto fell, USD index went up.

The Canadian Dollar was able to make some small gains against the weaker US Dollar as USD.CAD opens the day below the 1.3000 (0.7692) level for the first time in a few sessions. It is unchanged against the other currencies for the moment but with the US inflation report due out anything could happen to the Loonie.

Other than the US Inflation Report there is nothing else on the calendar for today. Something to watch is the developing story of a potential US rail strike, if this happens for a prolonged period of time it will have a dramatic effect on the US economy and will surely push the US into recession quicker than is expected.