Commodities and FX
Elsewhere, spot gold and silver continued to offer very little movement yesterday. Bids and offers remain even as traders battle haven-demand flows and hawkish central-bank expectations; gold continues to test the resolve of US$5,000, while US$80 remains supportive for silver.
In FX, the USD continued to unwind longs ahead of today’s Fed decision. The buck recently clocked a high of 100.54 – the highest level since May last year – and has been largely trending higher since late January off lows of 95.55. As you would expect, the EUR also continued to find bids. Earlier this morning, the Research Team noted that the EUR/USD rebounded at an ‘alternate’ daily AB=CD bullish formation at US$1.1422 (1.618% Fibonacci projection ratio), which is complemented by several additional ratios. Traders could now target the 38.2% and 61.8% Fibonacci retracements derived from legs A-D at US$1.1667 and US$1.1824, respectively.
Equities
Across stocks, major US benchmarks rebounded moderately on Tuesday, with the S&P 500 adding 17 points (0.3%) to 6,716, the Nasdaq 100 up 125 points (0.5%) to 24,780, and the Dow Jones gained 46 points (0.1%) to 46,993. Most companies ended the day in the green in the S&P 500, with 314 positive, 185 negative, and 4 unchanged. You can also see this in sector performance: gains were led by energy, consumer discretionary, and technology. It is also interesting to see what is happening in BTC right now, finding some independent momentum and closing in on US$60,000 as crypto shows tentative signs of decoupling from equity moves.
BoC: Likely a Non-event
The BoC will announce its rate decision at 1:45 pm GMT today. Investors expect the central bank to keep the policy rate on hold at 2.25% – the lower boundary of the BoC’s estimated neutral range.
The economic backdrop heading into the event shows a deteriorating labour market; you may recall that last week’s February print revealed that employment growth fell by nearly 85,000, marking the largest monthly drop since early 2022, while the unemployment rate ticked higher to 6.7% from 6.5% in January. This pushed back tightening expectations to 25 bps by year-end.
Headline YY CPI inflation eased to 1.8% from 2.3% in January, and both CPI median and trim measures also cooled by more than forecast. Nevertheless, as I noted in a previous post, this was largely because of base effects – the temporary sales tax dropped out of the annual comparison, which should weigh on March’s print as well. However, it is worth noting that this could already be stale in light of rising energy prices.
