Dollar, gold, and oil surge as uncertainty grips the markets.

North American markets turned bearish as geopolitical tensions escalated, compounded by a hotter-than-anticipated inflation report from the US. The S&P 500 and Nasdaq experienced declines of 1.6% and 0.55% respectively over the week, while Canada’s S&P/TSX fell by 1.6%.

The US inflation report for March revealed a 3.5% year-over-year increase, aligning with expectations. However, the core figure, which excludes volatile items like food and energy, exhibited a 3.8% increase, surpassing expectations.

Energy prices and shelter accounted for nearly half of the inflation. Shelter, represented by owners' occupied equivalent rent, reflects the impact of high interest rates on mortgage costs for US households.

The elevated inflation report dashed hopes for three rate cuts in the US in 2024, leading to growing skepticism in the markets regarding the possibility of rate cuts materializing this year.

The heightened inflation report bolstered the US dollar to higher levels. Meanwhile, the Canadian dollar depreciated against the USD, prompted by Canada's loss of 2,000 jobs last month and the inflation report revealing better-than-expected figures. The Bank of Canada is leaning towards proceeding with its rate cut plans in 2024, adding downward pressure on CAD. However, the CAD may find support from a potential new round of oil rally as geopolitical tensions escalate. As of today, the USD stands at 1.38 against the CAD.