CAD Weakens as Fed Holds Firm on Rates; Markets React to Powell’s Outlookv

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

US Dollar        1.4250-1.4490

Euro                 1.5500-1.5710

Sterling            1.8520-1.8740

WTI Oil (opening level) $67.13

The CAD/USD is opening at 1.4378 ( 0.6955 )

The CAD moved from the 1.4325 range to 1.4375 overnight on reaction to the FED expressed very little interest in cutting interest rates in the USA. The FED chair Powell warned that tariff policies by Trump tend to bring ' growth down and inflation up'. The central bank revised GDP growth to 1.7% for this year, down from the prior forecast of 2.1%.

Headlines

·    The FOMC's projections have solidified expectations for at least two rate cuts this year, due to a softened economic outlook with weaker growth, rising unemployment, and higher inflation linked to President Trump's policies. The Fed will also slow its balance sheet runoff starting next month, reducing the monthly cap of Treasuries allowed to mature from $25 billion to $5 billion.

·    Federal Reserve Chair Jerome Powell downplayed concerns about economic growth and inflation from President Trump's trade tariffs, describing their effects as temporary, which helped calm financial markets, though it risked damaging the Fed's credibility if the inflationary impact proves lasting

·    Turkish lira slumps after Istanbul's mayor, Ekrem Imamoglu, a prominent politician and chief opponent of President Erdogan, was arrested on charges of fraud and terrorism following the revocation of his university diploma, a move that could hinder his ability to contest Erdogan.

Key Points

·    Equities: Fed dovish; Tesla, Boeing rally; Earnings in focus

·    Volatility: VIX sharply down post-Fed; focus on economic data and earnings

·    Digital Assets: XRP surges post-SEC decision; Bitcoin stable; crypto stocks strong

·    Currencies: Turkish lira slumps. Sterling awaits rate decision

·    Fixed Income: US Treasury yields trade softer after FOMC

·    Commodities: Copper surge continues, gold hits fresh record. Crude rangebound