- Hawkish Fed, neutral BoC, sinks Loonie
- Risk sentiment sours as Gulf oil infrastructure is targeted by both sides
- The US dollar catches another “safe-haven” bid
USDCAD open: 1.3735, overnight range 1.3714-1.3748, close 1.3732, WTI 95.40, Gold 4700.22
The Canadian dollar is sinking to a mix of fresh global risk aversion and divergent Fed and BoC monetary policy outlooks.
The BoC left rates unchanged and delivered a slightly dovish statement. Policymakers highlighted downside risks to growth alongside elevated inflation risks, noting that price pressures are contained for now but could intensify if the Iran conflict drags on.
Meanwhile, the FOMC statement and Powell’s press conference leaned cautious to hawkish, with uncertainty tied to “developments in the Middle East.”
Both outcomes were largely priced in, but Israel’s strike on Iran’s gas field and Tehran’s retaliation against a Qatar LNG facility were not. The escalation quickly soured global risk sentiment.
WTI traded in a 94.93-99.14 range overnight before easing back to 95.46 by the New York open. Prices remain supported after reports that Iran struck the Qatar energy facility again and on concerns that additional Gulf infrastructure could be targeted.
The Fed left rates unchanged as expected in a 11-1 vote. The lone dissenter was Stephen Miran, widely seen as aligned with Trump.
EURUSD chopped in a 1.1443-1.1492 range after sliding from 1.1523 following the FOMC decision, with the single currency weighed down by rising oil prices as Gulf energy infrastructure comes under fire. Traders have largely brushed aside domestic data and are focused on today’s ECB decision, where no change is expected and guidance is likely to be deliberately vague.
GBPUSD bounced in a 1.3246-1.3298 range, dropping first and then rebounding. The dip followed mixed UK labour data, with employment rising by 84,000 versus 52,000 previously and the unemployment rate edging down to 5.2% from 5.3%, while wage growth slowed to a five-year low. The release was overshadowed by geopolitical risks and a lack of conviction ahead of the BoE meeting.
USDJPY traded with a negative bias in a 159.04-159.87 range, easing from its highs after the Bank of Japan left rates unchanged at 0.75% but struck a mildly hawkish tone. Policymakers signalled further tightening if the economy evolves as expected, and one member even voted for a 0.25% hike. Gains were capped by proximity to 160.00 and the threat of intervention, while higher oil prices helped underpin the downside.
AUDUSD traded in a 0.7021-0.7164 range, moving sideways amid mixed employment data, lingering effects from the recent RBA rate hike, a slightly hawkish Fed, and ongoing geopolitical tensions. Australia added 48,900 jobs in February, but the unemployment rate rose to 4.3% from 4.1%.
Today’s US data includes weekly jobless claims, the Philadelphia Fed Manufacturing Survey, and New Home Sales.
