WTI Remains Below $67.50 as Escalating Trade Tensions Overshadow Potential Demand Boost

USD/CAD regains positive traction and draws support from a combination of factors. 

Fed rate cut bets continue to undermine the USD and cap the upside for the major.

The mixed technical setup warrants caution before placing aggressive directional bets.

The USD/CAD pair attracts some dip-buyers in the vicinity of mid-1.4300s during the Asian session on Thursday and reverses a part of the previous day's losses. Spot prices climb to the 1.4400 neighborhood in the last hour, though a combination of factors might keep a lid on any meaningful upside. 

The Canadian Dollar (CAD) continues to be weighed down by the Bank of Canada's (BoC) seventh consecutive interest rate cut on Wednesday and the escalating US-Canada trade war. Apart from this, the lack of follow-through buying around Crude Oil prices undermines the commodity-linked Loonie and acts as a tailwind for the USD/CAD pair. However, the underlying bearish tone around the US Dollar (USD), amid bets that the Federal Reserve (Fed) will cut rates several times this year, caps the upside for the currency pair. 

From a technical perspective, the USD/CAD pair, so far, has been struggling to find acceptance above the 1.4500 psychological mark and the subsequent slide warrants caution for bullish traders. That said, positive oscillators on the daily chart suggest that any further decline is likely to find decent support near the 100-period Simple Moving Average (SMA) on the 4-hour chart, currently pegged around the 1.4345 area. A sustained break below, however, might prompt aggressive selling and pave the way for deeper losses.

The USD/CAD pair might then weaken further below the 100-day SMA, around the 1.4215 area, the 1.4200 mark, towards testing the year-to-date low, around the 1.4150 region set on February 14. Spot prices could eventually drop to the 1.4100 round-figure mark.

On the flip side, a sustained strength beyond the 1.4500 mark could allow the USD/CAD pair to test the monthly swing high, around the 1.4540-1.4545 region. Some follow-through buying could lift spot prices to the 1.4600 round figure en route to the 1.4670 region and the 1.4700 mark. The momentum could extend further towards the 1.4800 neighborhood, or the highest level since April 2003 touched last month.

USD/CAD 4-hour chart

Source: FXSTREET

The models are the brains behind Gemini, Google’s rival to ChatGPT and DeepSeek

Shares of Google parent company Alphabet (NASDAQ:GOOG) popped by close to 2% on Wednesday following the unveiling of Gemma 3, the tech giant’s new advanced AI models.

The FANG stock’s market price was up more than 1.8% by Wednesday afternoon, recovering from a drop-off in early morning trading and rising steadily throughout the day.

The bounce represents somewhat of a correction for Alphabet, with the stock having begun the day roughly 4% down from the same time last week.

Gemma 3 is an update on the models used to run Google’s Gemini AI chatbot, which was launched in 2024. They are intended to be used by developers in creating AI-powered applications. The technology is capable of analyzing text, video and images, with support across 35 languages.

The company is describing the new version of Gemma as “the world’s best single-accelerator model”, outperforming similar models created by DeepSeek, OpenAI, and Meta.

Google is also calling Gemma 3 “the most capable model you can run on a single GPU or TPU”.

Crucially, Google’s Gemma models are open-souce, meaning they are publicly accessible for anyone to use and modify.

Market favoring low-hardware AI tech

Google’s share price jump following the unveiling of Gemma 3 is consistent with recent market trends, which appear to favor AI technology with lower hardware requirements.

Chinese newcomer DeepSeek is perhaps the most stark example of this. The firm launched its R1 model in January and caused immediate disruption, posing a threat to U.S. AI firms whose models rely on high-end chips and considerable computing power.

Indeed, the launch of R1, which reportedly cost less to develop than ChatGPT, promptly sent the NASDAQ 100 and S&P 500 down 4% and 2.5%, respectively.

The emergence of DeepSeek has also coincided with rising tensions between the U.S. and China, with President Donald Trump continuing to threaten hefty tariffs on Chinese exports.

Source: FXSTREET

The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against its six major peers, remains steady after registering gains in the previous session, trading around 103.60 during the Asian hours on Thursday. However, the technical analysis of the daily chart indicates a persistent bearish bias, with the index moving downwards within a descending channel pattern.

The US Dollar Index is trading below the nine- and 50-day Exponential Moving Averages (EMAs), indicating a weakening short- and medium-term trend. However, the 14-day Relative Strength Index (RSI) remains below 30, suggesting oversold conditions and the potential for an upward correction.

On the downside, the US Dollar Index may test its primary support at the four-month low of 103.34, recorded on November 6, followed by the lower boundary of the descending channel at 103.00. A break below this critical support zone could strengthen the bearish outlook, pushing the index toward the five-month low of 100.68.

The DXY may encounter initial resistance at the nine-day EMA at 104.34. A break above this level could strengthen short-term price momentum, pushing the index toward the 50-day EMA at 106.44, followed by the upper boundary of the descending channel at 106.70.

US Dollar Index: Daily Chart

Source: FXSTREET

GBP/USD pair reached to four-month high of 1.2989 on March 13.

The US Dollar could further depreciate as recent US inflation data fueled expectations of the Fed delivering rate cuts soon.

RICS Housing Price Balance fell to 11% in February, marking its second consecutive decline.

GBP/USD attempts to extend its gains for the third successive day, trading around 1.2960 during the Asian session on Thursday. The GBP/USD pair rises as the US Dollar (USD) faces headwinds amid ongoing tariff uncertainty from US President Donald Trump and growing concerns over a potential US recession.

The Greenback may further lose ground as the US inflation cooled more than anticipated in February, raising speculation that the Federal Reserve (Fed) might cut interest rates sooner than expected. Market participants are now awaiting Thursday’s US Producer Price Index (PPI) data and weekly jobless claims for further economic cues.

US monthly headline inflation slowed to 0.2% in February from 0.5% in January, while core inflation eased to 0.2%, below the forecasted 0.3%. On an annual basis, headline inflation declined to 2.8% from 3.0%, while core inflation slipped to 3.1% from 3.3%.

In the United Kingdom (UK), the latest Residential Market Survey by RICS showed that the Housing Price Balance dropped to 11% in February, marking its second consecutive decline. This figure fell short of market expectations of 20% and was lower than January’s 21% reading.

UK Prime Minister Keir Starmer expressed optimism that Britain could avoid US tariffs on steel and aluminum, emphasizing a "pragmatic approach" in negotiations while keeping all options open. Unlike the European Union (EU), which has signaled immediate retaliation against Trump’s tariffs, the UK reaffirmed its commitment to trade talks with the United States (US).

Meanwhile, the UK’s 10-year gilt yield surged to 4.68%, its highest level in two months, as expectations grew that the Bank of England (BoE) will maintain elevated interest rates for a prolonged period. Traders now anticipate just a 52 basis point (bps) rate cut in 2025, scaling back earlier forecasts for more aggressive easing. Investors are now looking ahead to Friday’s UK monthly GDP data for January, which could provide further insights into the country’s economic outlook.

Source: FXSTREET

A majority of Americans believe President Donald Trump is being too “erratic” in his moves to shake up the US economy, as his imposition of tariffs against some of the nation's top trading partners hammers stock markets, a new Reuters/Ipsos poll found.

Some 57% of respondents, including one in three Republicans, said the president’s policies have been unsteady as his efforts to tax imports have set off a global trade war, according to the two-day poll that closed on Wednesday.

Americans instead want Trump to continue to focus on combating high prices even as there are growing concerns his policies will drive costs up, not down, the poll found.

Trump’s imposition of tariffs on allies such as Canada and Mexico and his refusal to rule out a recession has spooked US markets. The S&P 500 has lost more than US$3 trillion (RM13.3 trillion) in value since its all-time peak last month.

In response, the White House has said that some short-term economic pain might be necessary for Trump to implement his trade agenda, which is intended to drive manufacturing back to the US.

Wall Street has been shaken by some of Trump's whipsaw policy reversals. On Tuesday, Trump announced more severe tariffs on Canadian metals — causing stocks to fall — and then dropped the threat later that day after Canada made a concession.

Overall, 44% of respondents said they approved of the job Trump was doing as president, unchanged from a Reuters/Ipsos poll conducted March 3-4. He got particularly weak marks on the issue of the cost of living, where just 32% of respondents approved of his performance.

And most of them — 70% including nine in 10 Democrats and six in 10 Republicans — said they expected higher tariffs will make groceries and other regular purchases more expensive.

For most of his political career, Trump — a real estate developer turned reality TV star — has pointed to the strength of the stock market as an indication of economic health. But since returning to office, he has downplayed it.

“Markets are going to go up and they’re going to go down. We have to rebuild our country,” Trump said at the White House on Monday.

That’s a sharp change in tune from his first term, when, in March 2017, Trump celebrated the Dow Jones industrial average blasting through the 21,000 mark for the first time.

"Since November 8th, Election Day, the Stock Market has posted $3.2 trillion in GAINS and consumer confidence is at a 15 year high. Jobs!" Trump at the time posted on the site now called X.

A White House spokeswoman on Wednesday urged patience, calling the market’s performance “a snapshot of a moment in time, and we expect there will be good days and there will be bad days, but ultimately, Wall Street and Main Street are going to benefit from this president's policies, as they did in his first term.”

Inflation was far and away the top concern of respondents to the poll. Six in ten respondents said that was the issue they thought Trump should prioritize, far more than those who cited other presidential priorities including reducing the size of government, addressing immigration and fighting crime.

Recession warnings

Some analysts have painted a gloomier picture. Investment bank JPMorgan sees the risk of a US recession this year at around 40%, and considers an economic downturn even more likely if Trump follows through with another planned wave of tariffs in April.

Already, the White House has steepened levies on Chinese-made goods and on Wednesday hiked taxes on a wide range of imported automotive and tractor parts, construction materials and machinery parts — much of which are purchased from Canada and Mexico. Canada and the European Union on Wednesday pledged to retaliate with their own trade barriers on US products.

Inflation, which surged under Trump's predecessor in office, Democrat Joe Biden, remains high and is expected to increase due to tariffs, analysts say.

Despite the volatility, Republicans on Capitol Hill and Trump’s supporters still support his economic vision.

Senator Roger Marshall told Reuters he believes the market was “overvalued.”

“The market is one piece of the puzzle,” Marshall, of Kansas, told Reuters. “There’s other things going on: How do we get interest rates down, bringing manufacturing jobs here. I think it’s all a pretty complicated picture.”

Others acknowledged that the declines were a worry for Americans, particularly retirees and those approaching retirement age sensitive to their retirement savings accounts.

"We all know that people who are relying on retirement accounts watch them daily. And so, I think maybe he needs to be a little more sensitive to that," said Republican Senator Shelley Moore Capito of West Virginia.

Democratic Senator Richard Blumenthal of Connecticut viewed the sell-off differently. “It may not make any difference to him, because he's a billionaire. But to the everyday investor, it's a really big deal to lose this amount of money,” he said.

Nearly 80% of Republicans in the two-day poll said they agreed with a statement that Trump's actions on the economy "will pay off in the long run," a sign that some people in Trump's party have faith in his policies even if they are nervous about the short-term effects.

Forty-one percent of respondents overall — and just 5% if Democrats — said Trump's policies would pay off eventually.

Americans for Responsible Growth, an advocacy group representing Democratic state treasurers, called Trump’s approach “chaotic” and said it was harming investors across the nation.

“What may have seemed like a quick fix in Trump’s mind has become a big mess that will not only take a long time to clean up, but has also left consumers and businesses with higher prices, fewer choices, and more uncertainty,” said Dave Wallack, the group’s executive director.

The poll surveyed 1,422 US adults nationwide and had a margin of error for all respondents of three percentage points.

Source: Theedgemarkets