Gold Hits Record as Trade War Fears Mount

Today's expected range for the Canadian Dollar against the major currencies:

US Dollar        1.4220-1.4440

Euro                 1.4680-1.4910

Sterling            1.7610-1.7830

WTI Oil (opening level) $73.35

The CAD is opening at 1.4325 ( 0.6981 )

CAD is drifting in the same small range the last few days.

Headlines

Stocks dropped, USD rose on Trump tariffs and concern on retaliatory tariffs. The 25% duties on all aluminium and steel imports to the US were announced yesterday and are set to go in effect on March 12. Canada is the largest supplier of aluminium to the US, which relies on imports for more than 40% of its consumption. Trump also threatened retaliatory tariffs on any country assessing new tariffs against the US. One of the top beneficiaries of the tariff move was US steel-maker Cleveland Cliffs, which jumped nearly 18% yesterday.

Fed Chair Powell’s Testimony & Inflation Data – Powell’s Congressional testimony today will be closely monitored for rate policy guidance, especially with US January CPI data due tomorrow. A hot inflation print could disrupt expectations of two Fed rate cuts in 2025, influencing market sentiment and rate-sensitive assets.

Market Volatility & Policy Uncertainty – Investors are navigating rising geopolitical risks, trade uncertainty, and central bank policy shifts. With the ECB’s Lagarde and the BoE’s Bailey and Catherine Mann speaking today, European markets will react to any new monetary policy signals amid ongoing economic headwinds.

Key Points

·    The US dollar traded sideways against a soft euro and somewhat firmer Japanese yen, with less reactivity to Trump’s posturing on tariffs than in previous episodes. Key event risks this week await, including Fed Chair Powell testimony today before a Senate Panel and tomorrow before a House Panel, but as the Fed Chair has taken pains to remove forward guidance from the Fed’s playbook, it is tough to see this as a major catalyst. The CPI data tomorrow, further tariff announcements, and the direction in US treasury yields are likely the focus for USD traders

·    Gold hit a record $2,942.70/oz, fueled by inflation concerns and trade war risks. Silver firmed at $32.16/oz, while oil remained steady, with WTI at $72.46 (+2.1%) and Brent at $76.08 (+1.6%), supported by tightening Russian supply and geopolitical risks. Trump’s tariffs could disrupt the US energy sector, particularly oil drillers reliant on imported specialty steel.

·    Arabica coffee futures surged almost 25 cents to a new record high above $4.21/lb. on ongoing concerns of supply shortages, chiefly from Brazil.