Crude oil continues trading sideways around 79 in European session. Firmness in USD and lack of upside surprises in economic data hinder investors from adding long positions in commodities today. Supply disruption caused by an earthquake in Chile might tighten oil fundamentals but the actual impact will likely be limited.

USD remains firm against several major currencies. EURUSD continues trading at 9-month low around 1.35 as the market is skeptical about Greece's ability to solver the deficit challenge. Inflationary pressure in the Eurozone remains benign. Released earlier today, CPI rose +0.9% y/y in February, moderated from +1% in the prior month. PPI rose +0.7% in January on monthly basis but contracted -1% from a year ago. It's unlikely for the ECB to adjust it monetary policy outlook at Thursday's meeting.

The pound remains under pressure after slumping Monday. GBPUSD extends weakness below 1.5 even though the pair is deep in oversold condition. Construction PMI missed market expectation and fell to 48.5 in February from 48.6 a month ago.

2 oil refineries were closed after the earthquake hit Chile last Saturday. The 2 refineries amount to 220K bpd of capacity, representing around 0.25% of global oil demand. High distillate inventory and huge excessive refinery capacity can easily cover such amount. Therefore, price rally driven by the news was short-lived.

Gold trades narrowly for a second day. Price lacks direction as strong dollar limits upside while subdued inflationary pressure reduces the precious metal's appeal as storage of value. Gold refuses to decline decisively as low interest rate environment is positive for gold. At the same time, deficit problems in Greece, the UK and the US have driven investors to precious metals as they lost confidence in holding currencies.

The Bank of Canada will likely leave its policy rate unchanged at 0.25% today while keeping the statement that 'conditional on the outlook for inflation, the target overnight rate can be expected to remain at its current level until the end of the second quarter of 2010 in order to achieve the inflation target'.

Canada's GDP expanded +5% q/q (annualized) in 4Q09 from +0.9% in the prior quarter. The reading exceeded market expectation of a +4% growth and signaled the central bank's ultra low-rate policy has delivered its effect. Policymakers should acknowledge stronger-than-expected economic improvement in recent months and shed some light on tightening later in the year.