Brown Brothers Harriman’s (BBH) Elias Haddad notes the Federal Reserve is widely expected to keep the funds rate at 3.50%-3.75%, with markets focused on the vote split, dot plot and Chair Powell’s tone.

As widely anticipated, the Bank of Canada (BoC) left its policy rate unchanged at 2.25% on Wednesday. The focus now turns to Governor Tiff Macklem’s press conference at 14:30 GMT, where markets will be looking for further insight into today’s decision and clearer guidance on the policy outlook.

Canada BoC Interest Rate Decision meets forecasts (2.25%)

Gold (XAU/USD) trades with a downside bias on Wednesday as the US Dollar (USD) edges higher ahead of the Federal Reserve’s (Fed) interest rate decision due at 18:00 GMT. At the time of writing, XAU/USD is trading around $4,880 after briefly sliding to its lowest level since February 6 at $4,834.

The United States (US) Federal Reserve (Fed) announces its interest rate decision on Wednesday, a pivotal meeting for markets to gauge the stance of the world’s most important central bank after an energy shock that could put the Fed’s dual mandate in tension.

ING commodities strategists Warren Patterson and Ewa Manthey note that Copper prices have come under pressure following a sharp increase in exchange inventories. LME Copper stocks have risen to their highest level since 2019, driven by inflows into Taiwan and Baltimore.

EUR/GBP holds firm on Wednesday after paring earlier losses, as steady Eurozone inflation data underpins the Euro (EUR), leaving the British Pound (GBP) under modest pressure.

A spokesperson for Qatar's foreign ministry said on Wednesday that Iran's South Pars gas field is an extension of Qatar's North Field, per Reuters.

EUR/JPY trades around 183.50 on Wednesday at the time of writing, remaining virtually unchanged on the day as investors stay cautious ahead of the European Central Bank (ECB) and Bank of Japan (BoJ) monetary policy decisions on Thursday.

BNY’s EMEA Macro Strategist Geoff Yu notes that Emerging Market FX carry trades remain resilient despite the Middle East conflict, with only INR and RON now underheld among 12 high-yielders.

TD Securities analysts project further loosening in UK labour conditions, with employment falling, unemployment rising to its COVID peak of 5.3%, and wage growth easing but still elevated.

US Producer Prices rose 3.4% in February from a year earlier, according to the latest figures from the Bureau of Labour Statistics (BLS). The print came in well above estimates (2.9%) and the 2.9% gain recorded in the previous month.

ABN AMRO Bank economist Rogier Quaedvlieg argues that the latest energy shock, driven by the Strait of Hormuz closure, is a cost‑push shock that raises US inflation while weakening growth.

Canada Foreign Portfolio Investment in Canadian Securities registered at $46.73B above expectations ($4.72B) in January

Canada Canadian Portfolio Investment in Foreign Securities declined to $11.39B in January from previous $13.06B

United States Producer Price Index ex Food & Energy (YoY) above forecasts (3.7%) in February: Actual (3.9%)

United States Producer Price Index ex Food & Energy (MoM) came in at 0.5%, above forecasts (0.3%) in February

United States Producer Price Index (YoY) registered at 3.4% above expectations (2.9%) in February

United States Producer Price Index (MoM) registered at 0.7% above expectations (0.3%) in February

DBS’s Philip Wee notes that Japanese authorities have sharply escalated verbal intervention as the Japanese Yen weakens toward 160 against the Dollar, citing speculative moves and rising living costs.

BNY’s Head of Markets Macro Strategy Bob Savage notes the Dollar is entering the FOMC decision on solid footing, with earlier February Dollar hedging sales now fully reversed.

Silver price (XAG/USD) trades in a confined range below $80.00 during the European trading session on Wednesday. The white metal consolidates as investors await the Federal Reserve’s (Fed) monetary policy announcement at 18:00 GMT.

ING’s Francesco Pesole highlights that EUR/USD is driven by war developments and Federal Reserve communication, with a hawkish Dot Plot revision posing downside risks for the pair.

Societe Generale argues that a mildly restrictive Federal Reserve stance and potential hawkish adjustments to the SEP could support the Dollar against G10 and EM currencies.

The Pound Sterling (GBP) trades broadly flat against its major currency peers, consolidating around 1.3350 against the US Dollar (USD) during the European trading session on Wednesday. The British currency struggles for direction as investors have sidelined ahead of a data-packed Thursday.

TD Securities’ Global Strategy Team highlights that Aluminium has become a key casualty of Gulf conflict-related disruptions, with Bahrain and Qatar smelters curtailing output and force majeure declared at Alba.

MUFG’s Derek Halpenny highlights that the Canadian Dollar has been relatively resilient since the conflict began, supported by Oil-linked terms of trade. He expects the Bank of Canada to hold rates and deliver a cautious message, stressing uncertainty around energy-driven inflation.

South Africa Retail Sales (YoY) came in at 4.2%, above forecasts (2.5%) in January

United States MBA Mortgage Applications fell from previous 3.2% to -10.9% in March 13

The AUD/USD pair trades marginally higher to near 0.7115 during the European trading session on Wednesday. The Aussie pair is expected to trade broadly sideways as investors await the Federal Reserve’s (Fed) monetary policy outcome at 18:00 GMT.