EUR jumps higher as investors are spooked by the Spanish inflation data

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

US Dollar        1.3300-1.3400

Euro                1.4500-1.4600

Sterling           1.6500-1.6600

WTI Oil (opening level) $79.46

The US Dollar Index is marginally weaker this morning as reports of higher-than-expected Spanish inflation have pushed the Euro higher this morning. Investors reacted on the expectation that the European Central Bank which meets later this week will increase interest rates by 0.50% to help combat these higher levels of inflation, this is in contrast to the US Federal Reserve which is expected to only increase interest rates by 0.25% this week as inflation in the US is showing signs that is it slowing down. If this is the case going forward then we should see a continued rise in the Euro and a further drop off in the US Dollar.

The Canadian Dollar continues to range trade against the US Dollar as it opens the week near the 1.3350 (0.7490) level, it seems to have been stuck in the 1.3300-1.3400 range for a while but we may see a break out this week as we have lots of central bank interest rate hikes to deal with. In addition to the central bank activity, we also get the Canadian December GDP report tomorrow which is expected to show a very small level of growth to finish off the year which could indicate a recession is on the way very soon.

Nothing on the calendar of note for today, stocks look like the are in for a very rough opening as the Dow Jones is pointing down by 200 points at the moment, we may see a small jump in the US Dollar as markets get set for the Federal Reserve on Wednesday.