Today's expected range for the Canadian Dollar against the major currencies:
US Dollar 1.3570-1.3820
Euro 1.5650-1.5900
Sterling 1.8140-1.8390
WTI Oil (opening level) $96.85
The CAD/USD is opening at 1.3699 ( 0.7300 )
USD/CAD pair trades in a tight range around 1.3700 as investors await monetary policy announcements by the Bank of Canada and the Federal Reserve on Wednesday.
Investors expect both central banks to leave interest rates at their current levels, with a warning that conflicts in the Middle East have prompted inflation risks to the upside.
The Fed is unlikely to cut interest rates in any meeting before September. Even the odds of an interest rate cut in the September meeting have come down to almost 50% from 73% seen a week ago.
Surging oil prices amid energy supply disruption due to war in the Middle East have prompted gasoline prices in the US and major economies, potentially weighing on households’ purchasing power.
Headlines
· Canada's inflation rate dropped to 1.8% in February 2026 from 2.3% in January, the lowest since July. The decline followed the end of tax breaks, slowing food inflation to 5.3%. Price growth eased for various sectors, and BoC's core rates hit a four-year low of 2.3%.
· Australia’s Reserve Bank hiked the policy rate 25 basis points as most expected, taking the cash rate to 4.10%, but the decision was a narrow one with a 5-4 vote as the large minority voted to stand pat. Short Australian yields were choppy but almost unchanged by late trading in Australia, while the AUD strengthened modestly. The policy statement lifted concerns that inflation would remain above the bank’s target for longer than previously anticipated, though Governor Bullock was somewhat cautious, saying that the two consecutive recent hikes do not indicate that the bank is on a predetermined forward path.
· Fears of a prolonged Strait of Hormuz closure remains despite some tankers from Iran-friendly nations being allowed to navigate the chokepoint. However, renewed Iranian attacks on energy infrastructure across the region dampened hopes with Brent hovering near USD 105 with tight supply starting to impact consumers, especially in Asia where gasoline, jet fuel, and diesel trades near a high for this cycle.
· US industrial production rose 0.2% in February 2026, surpassing the 0.1% forecast. Manufacturing output increased 0.2%, and mining rose 0.8%, while utilities fell 0.6%. Capacity utilization remained at 76.3%, below the long-term average.
Key Points
· Equities: Stocks rebounded in the US and Europe as oil eased, while Asia split between stronger China data and Japan caution.
· Volatility: Geopolitics + central banks, VIX easing but elevated, oil-driven inflation risk
· Digital Assets: Crypto consolidates, ETF inflows supportive, IBIT/ETHA strong, options flow defensive
· Fixed Income: Global yields fall back on risk sentiment recover Monday, but US high yield corporate bonds still under pressure
· Currencies: US dollar strength eases. Muted AUD strength on split RBA decision to hike rates Tuesday
· Commodities: Crude lifted by Iraq infrastructure attacks; gold steady, wheat up on drought concerns, soy pressured by China meeting delay