Geopolitical tensions and stable interest rates: A look at the markets

The current Federal Reserve interest rate in the USA is 3.50-3.75%, and the latest data indicates that the market does not expect any changes at the upcoming FOMC meeting scheduled for April 29. Expectations for maintaining the current rate stand at 99.5%, suggesting that investors are counting on stability in monetary policy. Such a level of confidence may be the result of positive signals from the US economy and a lack of inflationary pressure that would force the Fed to change course. The high Fear & Greed Index at 70/100 indicates a prevailing greed, which may be a result of investors' confidence in stable market conditions.

The Middle East has once again found itself in the spotlight due to potential negotiations between the USA and Iran, which may be moderated by Pakistan. Iran plans to send a negotiating delegation to Pakistan, which could pave the way for talks with the USA, especially in the context of tensions around the Strait of Hormuz. President Trump emphasized that he will not open the strait until an agreement is reached, which has already prompted Kuwait to declare force majeure due to the halt in oil supplies. Such events can significantly impact oil prices in global markets, increasing their volatility and uncertainty.

Today, the monthly consumer price index (CPI) in Canada was also published, which amounted to 0.9%, slightly below the expected 1.1%. Although the result is higher than the previous reading of 0.5%, it did not meet analysts' expectations, which may impact Canada's monetary policy in the near future. Weaker-than-expected price growth could reduce pressure on the Bank of Canada regarding potential interest rate hikes, which in turn may affect the exchange rate of the Canadian dollar.

Tomorrow, investors will closely monitor the geopolitical situation around the Strait of Hormuz, as prolonged tensions may trigger a rise in oil prices. Additionally, the markets will be looking for further guidance on monetary policy from the Fed, especially in the context of the upcoming FOMC meeting. It is also worth observing the reactions of the Canadian dollar to the latest inflation data from Canada.