Market participants will largely focus on the Fed's latest decision on monetary policy, set to be released later today. The U.S. central bank is widely expected to cut rates by 25 basis points, but the burning question is whether we can expect a new round of QE in the near future. With the Federal Reserve holding a mostly hawkish stance for the better part of this year, anything is possible. It is important to note that yesterday there was a very rare event in the US where a liquidity shortfall pushed the repo rate up by 8% until the NY Fed injected 75 billion into the system, a measure which is expected to be repeated by the NY Fed today. This begs the question - why was there a liquidity shortfall in the first place, and does it mean that the FED needs to add liquidity again more regularly i.e. restart QE? Tonight's FED meeting instantly gained even more relevance than it already had!
Saudi Arabia to Provide Evidence on the Oil Attacks?
Meanwhile, Saudi Arabia stated they are back to full oil production and announced a press conference today that reportedly will show evidence that Iranian cruise missile technology was used in the attacks. Despite the possibly damming evidence, stock markets seem to be strangely detached from reality as they are apparently immune to geopolitical concerns without having any sort of reaction on these growing risk events.
Forex Preview:
Elsewhere the USD steadied ahead of the FED meeting but still traded near a seven-week high versus the yen, even if markets are still cautious ahead of the Fed meeting. We could see the greenback head significantly lower should the FED hint anything close to a QE resumption. Meanwhile, the EUR and GBP both edged somewhat higher as seemingly some progress was made on the backstop issue which hasn't been yet confirmed, however.
Oil Prices Dip, Gold & BTC Steady
Elsewhere, oil prices slipped this morning, extending losses from the previous session after Saudi Arabia's energy minister said the kingdom will restore lost oil production by the end of the month. Watch for the press conference today and for further developments on the U.S.-Saudi/Iran war. Spot gold traded flat, stuck just above the $1500 level while BTC also steadied near the $1200 range.
Recommended Content
Editors’ Picks
EUR/USD eases to near 1.0850 on renewed USD strength
EUR/USD stays under modest bearish pressure, battling 1.0850 in the European session on Tuesday. The renewed USD strength weighs on the pair. ZEW sentiment survey will be featured in the European economic docket ahead of housing data from the US.
USD/JPY extends rally beyond 150.00 as markets assess BoJ decisions
USD/JPY preserves its bullish momentum after breaking above 150.00 with the 'sell the fact' reaction to the Bank of Japan's decision to end negative interest rates. In the post-meeting press conference, Governor Ueda said they will consider options for easing broadly, including ones used in the past if needed.
Gold price struggles to lure buyers, holds steady above one-week low ahead of FOMC meeting
Gold price ticks lower amid reduced Fed rate cut bets, elevated US bond yields and stronger USD. Geopolitical tensions could lend some support to the safe-haven XAU/USD and help limit losses.
Why is the crypto market crashing?
The two most important contribution to the ongoing bull market is the meteoric rise in Bitcoin due to the ETF approval and the sudden interest spike in Solana ecosystem. But the recent move suggests that the upward momentum is dissipating and a correction looms.
Canada CPI Preview: Inflation pickup could scale back bets on early interest-rate cut
The Canadian Consumer Price Index is expected to have risen by 3.1% YoY in February. The BoC shows no rush to lower its interest rate. The Canadian Dollar maintains its multi-day lows against the US Dollar around 1.3540.