US stocks saw fluctuations today as investors braced for tomorrow's Federal Reserve statement, which they hope will clarify the timing of potential monetary easing. Economic data from the world's largest economy showed a higher-than-expected number of building permits and housing starts in February. According to the Commerce Department's report, permits for the future construction of single-family homes rose to a level not seen in over 1.5 years, indicating that demand remains strong despite a prolonged period of high interest rates. The dollar gained strength today, approaching the 104 level, while the 10-year US Treasury yield slightly declined to 4.3%. We anticipate that the Fed will maintain a data-dependent approach in its statement tomorrow, emphasising the necessity of ensuring inflation is on course to meet the target before proceeding with the first interest rate cut. While Powell will likely stick to the same narrative as before, we expect the markets to take any mention of a cut as a sign the monetary easing is approaching, possibly driving US Treasury yields lower. In other news, the Bank of Japan increased its short-term interest rates from -0.1% to 0%-0.1%, ending the negative interest rate policy in place since 2016. This decision led to a sharp decline in the yen against major currencies, with the USD/JPY pair surging to 150.
A dollar strength prompted a correction across the base metals complex today, providing much-needed relief following the rally in recent days. In particular, copper dipped below $9,000/t to trade at $8,980/t. However, as mentioned in our yesterday's comment, we anticipate that if prices struggle below the $8,800/t-9,000/t area, we could see further upside in the coming days. Likewise, aluminium edged lower but still held the support at $2,250/t intact, suggesting markets are comfortable with keeping prices at the higher end of trading ranges. Nickel, on the other hand, continued to correct, erasing March gains and bringing the metal closer to the fundamental value of $16,500-17,000/t, closing at $17,395/t. Tin sold off to $27,445/t.
Precious metals edged lower today. Gold stood at $2,153.7/oz, while silver traded at $24.9/oz. Meanwhile, oil prices continued to rise, with WTI reaching $83.70/oz and Brent crude advancing to $87.50/bl.
All price data is from 19.03.2024 as of 17:30
