News

Dollar Holds Steady Ahead of Fed Policy Meeting

USD

The dollar index, which measures the greenback against a basket of major currencies, hovered slightly below 92, as investors await the Federal Open Market Committee meeting outcome. The market is widely expecting the Fed to keep policy unchanged with interest rates near 0%, and Asset purchases at $120 billion. However, market participants are looking forward to the Fed's opinion over the recent rally in Treasury yields, the dot plot following the recent economic developments, and the economic projections. The dollar remained firmer across the board, where the EURUSD dipped to $1.1882, the USDJPY rallied to 109.20, and the AUDUSD dropped to $0.7723.

Equities

Major US stock index futures drifted lower during the Asian session ahead of Fed. Investors are cautious about the Fed's tone especially as yields continued to inch higher. If the Federal Reserve reaffirmed that the current rise in treasury yields is normal and they are unworried about it, it could open the way to further rally in yields which would add pressure on stocks, especially the overvalued ones. The Dow Jones Industrial Average futures eased to 32779, the S&P500 futures declined to 3953 after testing a record high of 3978, and Nasdaq futures retreated to 13109.

Metals

Precious metals prices were almost steady in anticipation of the Federal Reserve meeting. A continuation in the current trend of bond yields around the world, would continue to weigh on the non-yielding bullion. The price of a gold ounce hovered near $1730, the price of a silver ounce held steady near $26, while palladium futures jumped almost 5% to $2492.

Oil

Oil prices continued to trade in a tight range awaiting fresh fundamental drivers. The American Petroleum Institute reported a decline of 1 million barrels in US crude oil stock, ahead of official numbers by the US Energy Information Administration. The West Texas Intermediate crude April contract rallied to $65.30, and Brent Blend May contract rose to $68.86.

Major Economic Events

GMT Country Event Expectation Previous

10:00

EZ

 CPI (MoM) (Feb)

0.2%

0.2%

12:30

US

 Building Permits (Feb)

1.750

1.886

12:30

US

 Housing Starts (Feb)

1.560

1.580

12:30

CA

 CPI (MoM) (Feb)

0.7%

0.6%

14:30

US

 Crude Oil Inventories

2.964

13.798

18:00

US

 Fed Interest Rate Decision

0.25%

0.25%

18:30

US

 FOMC Press Conference 

-

-

21:45

NZ

 GDP (QoQ) (Q4)

0.1%

14.0%

 

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