Commodity Currencies Hit by Risk Sentiment & Oil Dip as Markets Tumble

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

US Dollar        1.4290-1.4500

Euro                 1.5590-1.5820

Sterling            1.8590-1.8730

WTI Oil (opening level) $66.82

The CAD/USD is opening at 1.4403 ( 0.6943 )

CAD and AUD and NZD (commodity currencies) were somewhat more impacted by weak risk sentiment yesterday and possibly the fresh dip in oil prices, on increasing worries the USA is headed for recession and the health of the world economy is in question.

As well, new Liberal party leader Mark Carney was out with a fiery speech directed at US President Trump.

Expect the unexpected for the next few weeks. 

Headlines

·    Markets traded sharply lower on Monday and followed through lower still overnight until bouncing strongly in Asian hours. President Trump in a recent interview said he did not rule out a recession due to tariff changes, calling the economy a “period of transition.” Fed Chair Powell noted rising uncertainty. Investors are focused on CPI and PPI data ahead of the FOMC meeting next week. Recent data shows concerns, with the jobs report indicating a weakening labor market and the full impact of DOGE cuts yet to be seen.

·    The NY Fed 1-year inflation expectations rose for a fourth month in February to 3.13% reaching the highest level since May.

·    Germany's Green party rejected a debt-financed package for defense and infrastructure spending, blasting the prospective ruling coalition's decision to leave them largely out of discussions and ignoring their priorities, but left the door open to further talks. Merz's team still sees scope for a last-minute agreement, and officials from the CDU and SPD believe a deal could be made this week.

Key Points 

·    Equities: US sell-off deepens; S&P 500 -2.7%, Nasdaq -3.9%; mega-cap tech tumbles; EU stocks drop; auto, defense sectors outperform

·    Volatility: VIX surges 16% to 27.98; 0DTE options heat up; Fed rate cut expectations shift

·    Digital Assets: Bitcoin -2.4%; Ethereum -8%; crypto stocks fall; MicroStrategy's capital raise fails to boost sentiment

·    Currencies: Currency moves muted relative to nervous markets elsewhere. USDJPY hit new cycle lows yet again overnight, but rebounded.

·    Fixed Income: Global yields drop further overnight but rebound off lows as risk sentiment bounces.

·    Commodities: Broad weakness extend to crude, gold and copper. Grains await key report