The Morning Update

The USD steadies, oil prices tumble, equity markets are down, and US yields rise on AI rout. The USD is steady, holding close to a 5½-month peak as investors scale back expectations of a December Fed rate cut and reposition around a firmer policy outlook. A slowdown in dollar-hedging activity from overseas investors has further eased downside pressure, helping the greenback stabilize after this year’s earlier tariff-driven slump. The latest U.S. nonfarm payrolls report painted a mixed but resilient labour-market picture, reinforcing the view that the Fed is likely to keep rates unchanged at its December meeting. With policy-easing bets now pared back to roughly a one-in-four chance, the dollar remains supported by a combination of improved sentiment, reduced hedging flows, and a cautious Fed. Global equities are heading for their worst week since April as stretched valuations and an AI-driven tech selloff deepen the risk-off tone. Fragile sentiment was underscored by the S&P 500’s sharp intraday reversal and a break below key technical levels, raising concerns about further downside. With more than $5 trillion wiped from this year’s tech-fueled rally, investors are questioning how much further the correction could extend. Elsewhere, oil prices weakened amid rising supply concerns and softer demand indicators, amplifying worries about a slowdown in global consumption. Bitcoin’s steep weekly drop, breaking through $83,000, and gold’s gradual easing reflect a broader retreat from risk, driven by tighter financial conditions, profit-taking, and a firmer U.S. dollar. In focus today are the CAD retail sales, the US PMI report, the Michigan Consumer Sentiment, and a flurry of Fed speakers, which will help drive intraday direction.

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In the news. Ukraine fears a US pressure campaign to accept the peace plan drawn up with Russia. Brussels to challenge Meloni over 'golden power' to stop foreign mergers. Foxconn-Nvidia $1.4 billion Taiwan supercomputing cluster to be ready H1 2026, Foxconn says. Paramount, Comcast and Netflix submit bids for Warner Bros Discovery, sources say. Bitcoin is heading for its worst month since the 2022 crypto collapse. Japan approves $135 billion stimulus to mitigate inflation plan. UK budget leaves Rachel Reeves facing a GBP 30 billion reckoning. The UAE plans to invest up to $50 billion in industries such as AI and energy. Air Canada Rouge begins shift to all-Boeing 737 MAX fleet.

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In currency markets. The yen gained support after Japanese officials delivered their strongest verbal intervention yet, with Finance Minister Katayama explicitly warning that FX action was possible to curb volatile declines. The rebound comes even as concerns persist over Japan’s worsening fiscal position and Prime Minister Takaichi’s ¥21.3 trillion stimulus package, which has weighed on the currency. Intervention risks are rising, but analysts caution that any measures are likely to provide only temporary relief, leaving the yen still near multi-decade lows against major peers. CNY & Asian currencies edged up by 0.1% on average against the USD. Trading currencies are sidelined, with ZAR down 0.1%, JPY, KWD, SEK, NOK, DKK, CZK & PLN flat, CHF, MXN, NZD, and AUD up 0.1% against the USD.

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In commodity markets. Oil prices weakened by 2.4%. Natural gas prices rallied 1.2%. Gold, Copper & Wheat prices eased 0.6%. Silver and coffee prices tumbled 3.8%. Soybean prices fell 0.3%.

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CAD holds below 1.4100 and remains steady after earlier touching a near two-week low, as mixed U.S. jobs data kept the Fed outlook uncertain and maintained a cautious tone in markets. September payrolls showed faster job growth but a rise in unemployment to a four-year high, leaving policymakers “flying blind” into December’s meeting and supporting recent USD firmness. Oil prices—critical for the loonie—were marginally softer, adding to the currency’s subdued performance. With domestic data offering little direction, traders now look to Friday’s Canadian retail sales for the next potential catalyst.

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EURCAD is flat in early trading as markets await fresh direction from Canada’s upcoming retail sales report, which is expected to show a 0.7% monthly decline for September. With both currencies lacking strong catalysts, traders are looking to the data for the next potential driver of movement in the cross.

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EUR is subdued below 1.1550 as weaker German and Eurozone PMIs curb any meaningful euro recovery following Thursday’s soft performance. Mixed U.S. data and steady dollar demand continue to limit upside momentum, with markets awaiting U.S. PMI releases for fresh direction. With the euro quiet and sentiment fragile, today’s U.S. figures will be key in determining whether the pair holds above 1.1500 into the weekend.

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GBPEUR remains range-bound, with Sterling stabilizing as profit-taking weighs on the Euro and BoE expectations help limit downside pressure. However, the Euro retains a slight advantage as weaker UK growth prospects, looming BoE rate cuts, and investor caution ahead of next week’s UK budget keep upside risks for the Pound contained.

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GBP is flat as markets absorb weaker UK retail sales and soft PMI figures, which have kept BoE rate-cut expectations elevated. With GBP/USD holding below 1.3100, the pair lacks clear directional drivers ahead of key U.S. PMI releases later today. Investor caution remains high ahead of next week’s UK budget, limiting appetite for fresh GBP positioning. Overall, sentiment toward the currency stays fragile as domestic data and fiscal uncertainty continue to cap upside potential.