Market update: US Dollar remains resilient amidst Middle East tensions

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

US Dollar         1.3700-1.3800

Euro                 1.4600-1.4700

Sterling            1.7125-1.7225

WTI Oil (opening level) $85.05

The US Dollar index is marginally weaker this morning but remains strong as markets await the next move in the escalating Middle East conflict. Stocks were lower over the weekend in Asia but seem to have calmed for the moment as it looks like there will not be an immediate response from Israel. The Dollar also remains supported as doubt continues to linger into markets as to when the Fed will first cut interest rates, it looks like June is off the table for the moment but with other central banks looking to move first the Dollar should remain supported.

The Canadian Dollar is a little bit stronger this morning that is after USD.CAD nearly touched the 1.3800 (0.7246) level overnight before falling about 50 points this morning to open near the 1.3750 (0.7273) level. With the overall strength in the US Dollar and the Bank of Canada looking like it will cut interest rates in June it is difficult to see the Loonie going on a sustained run at the moment. We do get the latest Canadian inflation report tomorrow so we may get some further clarity on where the Loonie is going after that report.

Stocks are poised to jump a little higher on the opening so it looks like the worst effect from the Iran attack has been muted, look for stocks to remain volatile and the US Dollar to remain strong this week.