It is supposed that the US economy will raise interest rates and it will last longer than previously thought

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

US Dollar        1.3650-1.3750

Euro                1.4350-1.4450

Sterling           1.6600-1.6700

WTI Oil (opening level) $86.20

The US Dollar index is much higher this morning as the US Inflation report came in slightly higher than expectation yesterday which pushed bond yields and the US dollar higher while driving the stock market lower. The chance now of a Federal Reserve interest rate hike next month has jumped to almost 50% and with the minutes of the Fed which were released earlier in the week it now looks like the US economy will have higher interest rates and they will be around longer than previously thought.

Like all currencies the Canadian Dollar suffered at the hands of the US Dollar as USD.CAD opens the day at the 1.3675 (0.7313) level which is its highest level in a week. The Loonie did fare a little better than most currencies as it was actually able to pick up some gains against both the Pound and Euro so overall the Loonie did not perform all that badly. The price of oil jumped again overnight as the Middle East conflict continues to make markets nervous, the Loonie and other commodity currencies may see some short-term benefit if the oil market continues to move higher.

On the calendar today we get some US secondary data in the form of the Michigan Sentiment Survey, for the most part the Loonie should remain vulnerable to higher moves by the US Dollar. Stocks at the moment are pointing higher on the opening but like yesterday they should come under pressure at some point.