– Fed to leave rates unchanged and issue a cautious-sounding statement.
– Bank of Japan leaves rates unchanged again.
– USD dollar opens with small gains compared to yesterdays close.
USDCAD: open 1.4322, overnight range 1.4296-1.4332, close 1.4300, WTI 66.40 Gold 3029.99
The Canadian dollar is trading choppily inside its recent range after falling oil prices and caution ahead of today’s Fed meeting eroded support.
WTI oil prices slumped after the American Petroleum Institute reported crude inventories rose by 4.59 million barrels last week, on top of the 4.24 million the week before. In addition, the Trump-Putin talks about a cease-fire in Ukraine were positive which offset concerns about supply disruptions from the Middle East. Houthi rebels in Yemen continue to harass Red Sea shipping.
The FOMC is expected to keep interest rates steady this afternoon, while concerns over Trump’s tariff policies linger, potentially dampening U.S. and global economic growth. The trajectory of the U.S. dollar hinges on the dot-plot projections. Tariffs are anticipated to slow growth and push unemployment higher. Analysts at ING Bank forecast the Fed will revise 2025 GDP downward to 2.0% from 2.1%, while maintaining inflation at 2.5% and unemployment at 4.3%.
EURUSD traded in a 1.0873-1.0947 range, consolidating recent gains after Germany’s Bundestag approved a €500 billion defense and infrastructure spending plan. However, political uncertainty remains as the government is in transition, leaving implementation details unclear.
Eurozone HICP eased to 2.3% from 2.4% year-over-year, but markets shrugged off the news. Optimism over a Ukraine-Russia ceasefire remains a risk for further gains, while long-term technicals remain bearish as long as prices stay below 1.1040.
GBPUSD drifted in a 1.2958-1.3005 range, paring previous gains ahead of today’s FOMC meeting and tomorrow’s Bank of England announcement. The BoE is widely expected to leave rates unchanged, given signs that inflation progress has stalled. The policy statement is likely to strike a neutral tone amid global growth uncertainty and concerns over Trump’s tariff measures. Despite near-term uncertainty, technicals remain bullish while above 1.2920.
USDJPY fluctuated between 149.15-150.02, showing little reaction after the Bank of Japan maintained its policy rate at 0.50%, as widely expected. The yen saw choppy price action, but ultimately opened in New York at levels similar to the previous session. The central bank reiterated its outlook on inflation approaching its target, while uncertainty over global trade policies persists. Analysts suggest a potential rate hike in May if upcoming inflation data exceeds expectations.
AUDUSD traded in a 0.6322-0.6367 range, retreating from its Asian session peak as traders exercised caution ahead of the FOMC decision.
There are no top-tier Canada or US economic data releases today.
