The RBA raised the rate to 4.1% amid a surge in fuel prices. The Canadian dollar strengthened following the inflation data release

On Monday, the US equity markets closed higher. By the end of the session, the Dow Jones Index (US30) gained 0.83%. The S&P 500 Index (US500) rose by 1.01%. The tech‑heavy NASDAQ (US100) finished up 1.13%. The main catalyst for optimism was a sharp decline in WTI crude prices to 93.5 dollars per barrel after the successful passage of the first tankers through the Strait of Hormuz, easing fears of long‑term stagflation. Lower energy pressure allowed 10‑year Treasury yields to fall to 4.22%, restoring investor interest in the technology and banking sectors. Despite the positive sentiment, trading volumes remained moderate as the market stayed cautious ahead of the upcoming Fed meeting and further news on the formation of an international maritime coalition in the Persian Gulf.

The Canadian dollar (CAD) is showing a confident recovery, rising above 1.37 per US dollar following encouraging inflation data. In February 2026, Canada’s Consumer Price Index (CPI) slowed to 1.8% year‑over‑year, below expectations (1.9%) and returning the indicator to the Bank of Canada’s target range. The transportation and housing sectors contributed most to the disinflationary trend, while core inflation metrics fell to four‑year lows, giving the regulator more room for maneuver amid a recent sharp drop in employment by 84,000 and a rise in unemployment to 6.7%. Ahead of the March 18 rate decision, markets are pricing in nearly a 100% probability that the BoC will keep its policy rate unchanged at 2.25%, though the sharp slowdown in inflation is prompting investors to reassess the timing of potential future easing.

The Mexican peso strengthened to 17.7 per US dollar, becoming one of the beneficiaries of the localized de‑escalation in the Middle East. The decline in geopolitical risk premium followed statements from key US allies, including Japan and Australia, expressing reluctance to enter the active phase of the maritime coalition. This reduced demand for the US dollar as a safe‑haven asset, allowing emerging‑market currencies to recover part of their losses amid a general decline in Treasury yields. With inflation accelerating, the market has fully priced out the possibility of a rate cut at the Bank of Mexico’s March 26 meeting. Keeping the rate at 7.00%, while the Fed is expected to ease or pause, supports the attractiveness of carry‑trade strategies.

European markets posted a solid rebound, breaking a three‑day losing streak. Germany’s DAX (DE40) rose by 0.50%, France’s CAC 40 (FR40) closed up 0.31%, Spain’s IBEX 35 (ES35) gained 0.18%, and the UK’s FTSE 100 (UK100) ended up 0.55%. Investors welcomed news that Indian LNG tankers successfully passed through the Strait of Hormuz. The event was interpreted as a sign of Tehran’s willingness to allow selective diplomatic exemptions from the blockade, slightly reducing the risk premium in oil prices and easing inflation concerns in Europe.

In the financial sector, the main story was UniCredit’s aggressive 35‑billion‑euro bid to acquire Germany’s Commerzbank. Despite immediate resistance from the German government, which holds a stake in the bank, Commerzbank shares surged 8.5%, while UniCredit added 0.5%, raising its stake in the German asset to 26%. Other heavyweights also supported the positive momentum: insurance giant Allianz and Deutsche Bank gained 1.5% amid bond‑market stabilization.
WTI crude prices fell more than 3%, settling at 95.3 dollars per barrel. The decline interrupted a powerful three‑day rally during which prices had surged 17.4%. The correction was triggered by early signs of partial restoration of shipping activity in the Strait of Hormuz: over the weekend, the Pakistani tanker and two LNG carriers successfully passed through the high‑risk zone. Reports that the US allowed transit for Iranian tankers and that India is negotiating passage for six more vessels gave the market hope that a full blockade may be avoided. Nevertheless, the situation remains critical, marked by the largest supply disruption in history: exports through the strait have fallen from a pre‑war 20 million barrels per day to just a few million. A new drone attack on the port of Fujairah in the UAE again halted Murban crude shipments, while ongoing Iranian strikes on Gulf infrastructure forced airlines to suspend flights to Dubai.

Silver prices stabilized around 80 dollars per ounce, reacting to the local easing in the energy market. The decline in WTI crude to 95 dollars per barrel and the successful passage of several tankers through the Strait of Hormuz reduced inflation fears, prompting speculative capital to exit precious metals. Additional pressure comes from expectations of a hawkish Fed decision this week: maintaining high interest rates increases the opportunity cost of holding metals, pushing investors toward the dollar and bonds amid falling yields.

Asian markets also traded without a unified direction. Japan’s Nikkei 225 (JP225) fell by 0.13%, China’s FTSE China A50 (CHA50) jumped with 0.76%, Hong Kong’s Hang Seng (HK50) rose by 1.45%, while Australia’s ASX 200 (AU200) closed down 0.39%.

The Australian dollar (AUD) strengthened to 0.71 per US dollar following the RBA hawkish decision. The regulator raised the cash rate by 25 basis points to 4.1%, marking a second consecutive hike and underscoring Michelle Bullock’s determination to combat inflationary pressures driven by the Middle East conflict and the spike in fuel prices. The move fully offset a significant portion of last year’s easing cycle, returning borrowing costs to levels last seen more than a year ago. The “aussie” is also supported by persistent labor‑market tightness and the RBA leadership’s hawkish stance, which leaves the door open for further tightening in May.