Markets Await Fed Decision as CAD Holds Steady

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

US Dollar        1.4190-1.4430

Euro                 1.5510-1.5730

Sterling            1.8470-1.8690

WTI Oil (opening level) $66.81

The CAD/USD is opening at 1.4326 ( 0.6980 )

Focus today will be on the 2pm announcement from the USA Fed chair Powell. The result of the monetary policy statement will have a immediate and long term affect on the market.

Overnight the CAD traded in the low 1.43's and will likely stay in that range. CAD will likely trade sideways until the announcement. 

Headlines

·    Germany's outgoing parliament approved a major increase in government borrowing, including an overhaul of debt rules. The CDU/CSU bloc, SPD, and Greens secured a deal exempting defence spending from debt limits and establishing a €500 billion infrastructure plan. It now awaits a vote in the Bundesrat on Friday.

·    U.S. import prices increased by 0.4% in February 2025, surpassing expectations. Fuel prices rose by 1.7%, while nonfuel import prices went up by 0.3%, driven by higher costs for industrial supplies and consumer goods.

·    Canada's inflation rate rose to 2.6% in February 2025, the highest in eight months, exceeding expectations. The increase was driven by the end of GST and HST (harmonized sales tax) breaks, raising prices of eligible goods. Inflation slowed for restaurants and alcoholic beverages, causing a rebound in the food sub index.

·    U.S. industrial production increased by 0.7% in February 2025, surpassing expectations. Manufacturing output rose by 0.9%, driven by an 8.5% jump in motor vehicles and parts, while other manufacturing increased by 0.4%.

·    Vladimir Putin rejected Trump’s demand for a 30-day ceasefire in Ukraine, agreeing only to limit attacks on energy infrastructure while demanding a halt to the flow of weapons and intelligence to Kyiv. Trump despite getting nothing, still hailed the call as progress, while European allies pushed to accelerate arms shipments to Ukraine.

Key Points

·    Equities: Fed decision awaited; tech-led decline; Europe rises on German spending package; Asia mixed

·    Volatility: Sharp rise ahead of Fed; significant short-term spike; geopolitical concerns remain high

·    Digital Assets: Crypto stable but cautious; BTC technical risks persist; crypto stocks underperform

·    Currencies: USDJPY near 150 as BOJ holds rates steady

·    Fixed Income: US Treasury yields rangebound ahead of FOMC, Bund yields lower after vote

·    Commodities: Gold’s record run continues. Crude lower on stock build and trade frictions