RBNZ holds rates as expected and confirms dovish stance. Inflation declines in Canada

On Tuesday, trading on the US stock market concluded with moderate gains. By the end of the day, the Dow Jones Index (US30) rose by 0.07%. The S&P 500 (US500) climbed by 0.10%. The tech-heavy Nasdaq (US100) closed higher by 0.14%. The financial sector outperformed the broader market: shares of JPMorgan Chase and Citigroup strengthened following statements from FOMC representatives regarding the likely maintenance of tight policy, which supports expectations for net interest margins. Investors are now awaiting the publication of the regulator’s minutes and core PCE inflation data to assess the sustainability of the disinflationary trend.

The Canadian dollar (CAD) weakened to 1.367 per US dollar, retreating from a 16-month high reached in late January amid slowing inflation and deteriorating foreign trade conditions. Consumer price growth slowed to 2.3% in January, while the Bank of Canada’s (BoC) core indicator dropped to 2.4%. This reinforced expectations of a pause in policy tightening at a rate of 2.25% and narrowed the yield differential that had previously supported the currency. Additional pressure is coming from the commodities factor: oil quotes are being held back amid discussions within OPEC+ regarding a potential production increase starting in April.

European markets ended the day with gains. Germany’s DAX (DE40) rose by 0.80%, France’s CAC 40 (FR40) closed up 0.54%, Spain’s IBEX 35 (ES35) gained 0.60%, and the UK’s FTSE 100 (UK100) closed up 0.79%. The German DAX 40 closed Tuesday at 24,998 points, a one-week high, reflecting improved sentiment across European trading floors.

WTI oil prices held above $62 per barrel, breaking the recent decline as markets assessed the outcome of negotiations between the US and Iran regarding the nuclear program. Tehran reported reaching a general understanding on key points of a potential deal, while the American side announced the continuation of dialogue in Geneva. However, uncertainty remains: Iran temporarily restricted shipping in the Strait of Hormuz due to military exercises, and the US dispatched a second aircraft carrier to the region.

Platinum (XPT) prices dropped to approximately $2,000 per ounce, hitting a two-month low amid a general decline in the precious metals segment and reduced trading activity due to holidays in Asia and the US. Despite the slowdown in US inflation, which bolstered expectations of Fed rate cuts later this year, investors remain cautious ahead of the release of new data and the regulator’s minutes.

Natural gas (XNG) prices in the US fell by 5% to approximately $3.07 per MMBtu, hitting a low since October. Pressure on quotes was intensified by near-record production volumes and prognoses of warmer weather through early March, which weakens heating demand and allows for the accumulation of large inventories in storage. Average production in the Lower 48 states rose to 108.5 billion cubic feet per day (bcf/d) in February, up from 106.3 billion in January, with daily figures recently hitting 111 billion bcf/d, approaching historic highs. Additional market support comes from rising exports to LNG terminals, which increased to 18.6 bcf/d in February and could surpass the December record.

Asian markets traded without a uniform trend yesterday. Japan’s Nikkei 225 (JP225) declined by 0.42%, China’s FTSE China A50 (CHA50) will not trade for the entire week due to Lunar New Year celebrations, Hong Kong’s Hang Seng (HK50) also did not trade yesterday, and Australia’s ASX 200 (AU200) showed a positive result of 0.24%.

The New Zealand dollar (NZD) declined to $0.601 following the Reserve Bank of New Zealand’s (RBNZ) decision to maintain the key rate and confirm a dovish policy stance. The regulator signaled that supportive conditions will remain in the near term, and further steps will be gradual as the economy strengthens and inflation returns to the target level. Meanwhile, updated expectations allow for a possible 25 bp rate hike as early as the end of the year – significantly earlier than previous guidance for 2027.