US Dollar Holds Steady Amidst Inflation Concerns: Fed's Stance and Market Outlook

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

US Dollar        1.3550-1.3650

Euro                1.4650-1.4750

Sterling           1.7125-1.7225

WTI Oil (opening level) $79.64

The US Dollar index is marginally stronger this morning as yesterday's PCE Core price index showed a very small decline in inflation which should keep the Fed on the sidelines until at least the 2nd half of the year before they start to cut interest rates. At the moment the US economy while slowing signs of slowing is still very strong and will give the Fed room to continue to attack inflation.

The Canadian Dollar for the most part is unchanged this morning as the final fourth quarter GDP reading showed the economy grew at a 1% rate, while avoiding a technical recession the growth level in Canada does not compare to that of the US so the Loonie should continue to trade with a weak bias. This reading sets up the Bank of Canada to keep interest rates at current levels next week so for the moment I don't see much impact on the Loonie's value coming out of Canada.

Lots of secondary US data and Federal Reserve speakers but for the most part the message will be the same, interest rates will stay high until the Fed is confident that in inflation is under control. Stocks after reaching another record high but are poised to give back some gains to close out the week so look for the US Dollar to stay supported today.