The Morning Update

The USD remains steady, oil prices edge higher, equity markets rally, and US yields rise, with the focus on the Fed. The U.S. dollar held near a three-month high as investors bet the Federal Reserve will stay cautious following its recent rate cut. Chair Jerome Powell hinted it could be the last reduction this year, citing economic uncertainty amid the prolonged U.S. government shutdown, which is delaying key data. The dollar index climbed to 99.89, its strongest level since August, with markets watching to see if the greenback can break above its recent trading range. Global equities extended gains at the start of the week, with U.S., European, and Asian stocks all rising as investors looked beyond stretched valuations and focused on upcoming private data releases for direction on interest rates. S&P 500 futures advanced 0.4%, signalling a firm start to November amid optimism over tech earnings and momentum in artificial intelligence, even as the U.S. government shutdown continues. Investors are now closely watching labour market indicators, including ISM surveys and ADP employment data, as well as a series of Federal Reserve speeches following Chair Jerome Powell’s cautious comments on future rate cuts. Elsewhere, oil prices edged higher as traders weighed ongoing geopolitical risks and stronger U.S. consumption. Gold held firm amid safe-haven demand and expectations of further central-bank easing. In contrast, Bitcoin weakened, reflecting investor rotation out of high-risk assets amid the shifting macro backdrop. Today's focus will be on the US ISM Manufacturing PMI report and the BoC's Governor Macklem's speech to help provide direction to currency markets.

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In the news. Eurozone manufacturing stagnates in October amid weak demand, PMI shows. Trump threatens Nigeria with military action over violence against Christians. Businesses press the Supreme Court to strike down Trump's emergency tariff power. Indonesia's China-backed bullet train derailed by mounting debt. Berkshire operating earnings jump 34%, Buffett buys back no stock, raises cash hoard to $381 billion. Treasury Secretary Bessent says SNAP food benefits could restart by Wednesday. 'Government will have to respond,' says former budget officer ahead of the federal budget. Big oil ceo's warn Trump's Russia sanctions will hit supplies.

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In currency markets. The Japanese yen weakened further against the U.S. dollar, pressured by ongoing political uncertainty in Tokyo and expectations that the Bank of Japan will maintain its ultra-loose monetary stance. The Swiss franc also softened as the dollar’s strength and shifting rate expectations reduced demand for traditional safe-haven assets. Meanwhile, the Norwegian krone declined as steady rates from Norges Bank and softer oil prices weighed on the energy-linked currency. CNY is flat, while Asian currencies weakened by 0.25%. Trading currencies mostly come under pressure, with CHF & NOK weakened by 0.4%. SEK, CZK & PLN fell 0.25%. DKK, AUD, and JPY dropped 0.15%. NZD & KWD flat. MXN & DKK firmed 0.1% against the USD.

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In commodity markets. Oil prices up 0.1%. Natural Gas prices rallied by 3.1%. Gold, Silver and Soybean prices firmed by 0.5%. Copper prices are flat. Wheat & Coffee prices strengthened by 1.5%.

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CAD weakened to a two-week low, retesting the 1.4050 level against the U.S. dollar, as investors awaited fresh guidance from Bank of Canada Governor Tiff Macklem and details of the Liberal government’s upcoming November budget. Macklem is expected to maintain a cautious tone, emphasizing that policy remains appropriately restrictive while the central bank monitors softening economic momentum and global trade headwinds. Markets are also watching to see whether fiscal measures in the forthcoming budget can offset slowing growth or add to inflation risks, potentially influencing the BoC’s next policy steps.

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EURCAD has extended its gains amid softening Canadian economic signals and a weak showing in the European Central Bank's area manufacturing sector, where activity stagnated in October with new orders flatlining. The uptick in the cross is further supported by markets anticipating another rate cut from the Bank of Canada, as domestic data reinforce a narrative of slowing growth and mounting vulnerabilities in Canada’s economy.

EUR slipped in early trading, with EUR/USD dropping toward 1.1500 to hit a fresh three-month low as broad U.S. dollar strength persisted. The greenback’s momentum was supported by hawkish remarks from Federal Reserve officials following Chair Powell’s cautious policy tone, keeping investors focused on upcoming U.S. ISM Manufacturing PMI data for further direction. Meanwhile, eurozone manufacturing stagnated in October, and upcoming comments from ECB officials, including Lane and Escrivá, are expected to reinforce a stable monetary stance.

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GBPEUR remains flat in early trading as the pound struggles for traction amid cautious sentiment in the eurozone. The cross is holding at roughly 1.1398, but with limited fresh catalysts, investors appear to be waiting for key upcoming UK and eurozone policy developments before committing further.

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GBP remains on the defensive, trading near mid-1.3100s against the U.S. Dollar and hovering close to its lowest level since mid-April. The greenback has steadied after last week’s Fed-driven rally, while the pound continues to struggle under the weight of fiscal concerns ahead of the UK’s Autumn Budget. Expectations that the Office for Budget Responsibility will downgrade productivity forecasts and widen the fiscal gap have reinforced market bets on a December Bank of England rate cut. Traders now turn their focus to U.S. ISM Manufacturing PMI data for fresh direction, with stronger readings likely to add further pressure on GBP/USD.