The Morning Update

The USD is steady, oil prices are rallying, equity markets are down, and US yields are mixed due to expectations of an imminent Fed rate cut. The U.S. dollar remained steady in early trading. Still, it was on track for a weekly loss as investors pared their positions ahead of a flood of delayed U.S. economic data following the end of the government shutdown. Despite higher Treasury yields and a cautious tone from Federal Reserve officials, the greenback hovered near a two-week low, weighed down by uncertainty over growth and the pace of future rate cuts. Global equities fell as investor sentiment soured amid renewed fears that the Federal Reserve may delay rate cuts following a series of hawkish comments from policymakers. U.S. stocks extended losses, led by declines in technology shares, while European markets and UK equities also retreated amid fiscal uncertainty following Chancellor Rachel Reeves’ budget shift. Weak Chinese economic data and cooling industrial output further dampened risk appetite, reinforcing a cautious tone across markets as traders braced for more volatility heading into year-end. Elsewhere, oil prices rallied on signs of stronger demand and tighter supply, while gold weakened as a firmer U.S. dollar reduced safe-haven demand. Bitcoin tumbled alongside broader risk aversion, highlighting its sensitivity to shifting market sentiment. Today’s economic calendar is relatively quiet with no major U.S. data releases, leaving the spotlight on comments from ECB President Christine Lagarde and a series of speeches from both Fed and ECB officials, which are expected to guide intraday direction in currency markets.

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In the news. China's economy jolted by weakest factory output, retail sales growth in over a year. BHP liable for 2015 Brazil dam collapse, UK court rules in mammoth lawsuit. Canada to reroute lumber exports as Trump tariffs bite. Xi's military purge raises doubts about China's war readiness. Starmer and Reeves drop proposal to increase income tax rates in the budget. Global stock sell-off deepens on tech fears and doubts over US rate cuts. Cartier owner predicts the US will soon lower punitive Swiss tariffs. A Swedish manufacturer says 10,000 new jobs could be created in Canada. Canada moves to rebuild trade ties with India after years of tension.

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In currency markets. The South African rand and Norwegian krone weakened amid risk-off sentiment and softer commodity prices, reflecting pressure on high-beta currencies. Meanwhile, the Japanese yen held steady, supported by its safe-haven appeal in cautious market conditions. CNY and Asian currencies, on average, are flat against the USD. Trading currencies comes under pressure, with the SEK, ZAR & NOK weakening by 0.55%, the NZD falling 0.4%, the MXN, CZK & PLN easing by 0.25%, and the KWD & DKK down 0.15%. JPY is Flat, while CHF & AUD are up 0.15% against the USD.

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In commodity markets. Oil prices rally 2.5%. Natural Gas and Coffee prices tumbled 2.5%. Gold & Copper prices fell 0.5%. Silver prices weakened 1.1%. Soybean prices up 0.2%, and Wheat prices gained 0.6%

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CAD held steady in early trading after overnight losses, as investor sentiment remained cautious amid renewed doubts over a near-term Federal Reserve rate cut. The loonie traded near 1.4050, supported by steady oil prices and a broadly softer greenback. Recent Bank of Canada minutes signalled that policymakers are comfortable pausing their easing cycle, stating that rates are “about the right level” to keep inflation near the target. This stance has helped stabilize the currency even as global risk appetite wavers.

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EURCAD slipped in early trading even as Eurozone Q3 GDP rose 0.2% quarter-on-quarter and 1.3% year-on-year, both exceeding expectations. The euro’s gains were short-lived as markets looked past the data amid broader cautious sentiment.

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EUR eased toward 1.1600 in early European trading as renewed U.S. dollar buying emerged amid a softer risk tone. While the Eurozone Q3 GDP confirmed 0.2% quarterly growth as expected, the data had little market impact as attention turned to upcoming comments from ECB President Christine Lagarde. Markets will closely watch Lagarde’s tone for clues on the central bank’s policy path — specifically whether she signals confidence in inflation returning to target or hints at caution amid lingering economic softness. Her remarks could help shape expectations for the timing of future rate adjustments and influence short-term direction in EUR/USD.

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GBPEUR pair traded flat in early European hours as investors awaited fresh economic cues from both regions. The euro was capped by cautious ECB commentary on slowing growth, while the pound found support from firm UK data that tempered expectations of further BoE rate cuts.

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GBP falls below 1.3150 as fiscal and political uncertainty weighed on sentiment following reports that Prime Minister Keir Starmer and Chancellor Rachel Reeves dropped plans to raise income tax ahead of the November 26 budget. While an improved fiscal outlook was cited as a reason for the decision, concerns over fiscal discipline and revenue shortfalls have kept investors cautious. Meanwhile, weak UK growth data and expectations of a Bank of England rate cut next month continue to limit GBP's upside.