Only the prolonged decline in the path of inflation can push the FED to cut the interest rates

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

US Dollar        1.3300-1.3400

Euro                1.4550-1.4650

Sterling           1.6900-1.7000

WTI Oil (opening level) $73.37

The US Dollar index is marginally weaker this morning as the markets reacted to the release of the Federal Reserve meeting minutes yesterday. The release of the minutes indicated that the Fed believes that interest rates have reached their peak but they did not give any indication of when they will start to cut, instead they indicated that they want to see a prolonged decline in the path of inflation before they will look to consider a rate cut. Markets have now moved their expectation that the first-rate cut will come in May instead of March but of course that all depends on how the economy performs.

The Canadian Dollar stemmed its losses against the US Dollar yesterday as USD.CAD opens the day near the 1.3350 (0.7491) level down from its highs near the 1.3370 (0.7479) level seen earlier in the overnight session. Of interest to the Canadian Dollar and other commodity currencies is the big overnight jump in the oil price, Libya closed off a production facility yesterday as a result of protestors invading the facility but there is also a growing nervousness in the market that further escalation in the Middle East conflict could disrupt global oil production and that is why we have seen a big jump in the price which may benefit the Loonie and other commodity currencies.

Nothing major on the calendar today, stocks after a tough day yesterday look set to push a little higher on the opening as the market gets set for tomorrow's employment news.