Bank of Japan surprised global markets with the dramatic change in the monetary policy

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

US Dollar             1.3600-1.3700

Euro                     1.4450-1.4550

Sterling                1.6475-1.6575

WTI Oil (opening level) $74.90

The US Dollar index is marginally stronger this morning but that is after it took a bit of a hit yesterday at the hands of the Japanese Yen. Yesterday saw the BOJ announce a small change to their policy of ultra low interest rates to help stimulate a stagnant economy which had been in place for decades. Investors immediately jumped on the idea that the BOJ would be following other Central Banks and start increasing interest rates to combat inflation, if this is the case it is a dramatic shift in policy for the country and it took markets a bit by surprise.

The Canadian Dollar was able to pick up a little strength against the US Dollar yesterday but for the most part the Loonie is still range trading at the moment. After trading near 1.3700 (0.7299) yesterday the Loonie rallied to trade at 1.3625 (0.7339) this morning and it was also able to pick up some small gains against the other currencies so overall a positive day for the Canadian Dollar. The Loonie was helped also yesterday by a decent November Retail Sales report that showed only a very slight drop in sales after the previous pickup on the October number.

The Loonie will be front and centre this morning as the market releases the November Inflation report where it is expected that inflation has again moderated a little being down to 6.7% from the 6.9% in October. The Bank of Canada will like to see the decline but it won’t be enough to change their policy of increasing interest rates as the level is still quite high so the Loonie might get a bit of a benefit today but I doubt it will be enough to move it out of the recent range.