The U.S. Dollar is trading lower ahead of this afternoon’s FOMC policy meeting. This weakness is helping to boost April Gold prices overnight. The recent break in gold stopped short of the late February bottom at $1088.50 to maintain the uptrend.
Buyers came in on Monday to support prices after the hard sell-off in the British Pound triggered concerns that the currency would collapse over concerns about its ability to service its debt and a possible cut in its credit rating. As long as this is an issue, look for buyers to support gold as they debate whether hard assets are a better investment than paper currencies.
Stock indices are trading higher this morning boosted by demand for higher yielding assets. On Monday, the market turned around late in the session, proving once again that investors like to buy dips. As long as stocks continue to provide a positive return, look for investors to maintain their upside bias. At this time there aren’t many investments around offering a high yield which should keep investors interested in the long side.
June Treasury Bonds are holding steady to better ahead of the Fed meeting. Trading has been light and volume thin while investors await the next move by the Fed. Stronger demand for higher yielding assets is likely to maintain downside pressure on this market. Any hint that interest rates will be moving higher is likely to exert pressure on the Bonds late in the day.
The U.S. Dollar is trading lower against most majors except the Japanese Yen, as investors await this afternoon’s FOMC policy statement and tomorrow’s Bank of Japan monetary policy decision.
The Fed is expected to leave interest rates unchanged at historically low levels and reiterate its stance that rates can remain low “for an extended period”. Based on recent economic reports, the Fed isn’t expected to make any significant changes at this time. Nonetheless, the language of the statement will be closely watched for any significant changes.
In addition to maintaining a historically low interest rate, the Fed is likely to say that inflation is subdued and while the economy continues to improve, the employment situation is still a major concern. Traders will also be watching to see if there are any dissenters at this meeting. At the last meeting, Thomas Hoenig, president of the San Francisco Federal Reserve Bank broke rank with the other members and called for the Fed to soften the language of its statement.
On Wednesday, the Bank of Japan is expected to maintain its historically low overnight call rate at 0.1%. Members of the BoJ are expected to discuss adding additional liquidity-boosting measures to help revive the economy.
Overnight the March Euro is trading inside of its recent range. The key issue driving this market is whether Greece will receive bailout money from Germany and France. Gann angle support at 1.3640 is underpinning the market at this time.
The March British Pound is trading a little better. The market is still trading inside of a retracement zone created by the weekly range of 1.3501 to 1.7042. This retracement zone is 1.4854 to 1.5271. The key fundamentals driving this market are political uncertainty, the poor economy and a soft monetary policy.
The March Japanese Yen is trading lower. Setting tomorrow’s BoJ meeting aside, this market will react to the direction of the stock market today. Increased demand for higher risk assets is likely to pressure this market. A breakdown under a 50% price at 1.1019 could trigger an acceleration to the downside.
The March Swiss Franc is trading higher because of the strength in the Euro. Yesterday’s closing price reversal top has been negated, putting this market on a path toward a major 50% level at .9526.
The desire for higher risk assets is helping to underpin the March Canadian Dollar. Based on the current chart formation and the upside momentum, investors should look for this market to continue up to parity or the July 15, 2008 low at 1.0019. 
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