The Morning Update

The USD extends its rally, oil prices strengthen, equity markets are up, and US yields are mixed ahead of the US jobs report. The USD strengthens in early trading, as fading expectations for a December Fed rate cut—now priced below 25%—reinforce U.S. yield support. Fed minutes showed “many” officials unwilling to ease in December, sharpening the market’s focus on upcoming nonfarm payrolls despite the data being months delayed. Even in a stale environment, a strong or surprising jobs print could further entrench the dollar’s momentum by underscoring the resilience of the U.S. labour market. Global equities rallied as Nvidia’s strong revenue forecast reignited AI optimism, lifting tech shares across the U.S., Europe, and Asia. The upbeat tone helped ease recent concerns about stretched valuations and heavy AI-infrastructure spending, restoring confidence after weeks of tech-led volatility. With sentiment stabilizing, attention now shifts to the upcoming U.S. jobs report, which could influence rate expectations and determine whether the rebound has room to extend. Elsewhere, oil prices strengthened on renewed supply concerns while bitcoin extended its climb toward the 92,000 level, supported by improving risk appetite. Gold, meanwhile, eased as traders booked profits and positioned cautiously ahead of key U.S. Jobs data. Today's focus will be on the US Nonfarm payroll report, the Average Hourly Earnings, the Unemployment rate, the EU Consumer Confidence, and Fed policymaker comments to help drive intraday direction.

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In the news. Nvidia shrugs off "AI bubble" anxiety with bumper chip demand. French Premier expected to fail early budget test. Europe's carmakers risk losing plug-in hybrid war to China on their own turf. The US and Russian officials draft a new peace plan for Ukraine. Trump's total boycott of the G20 casts a shadow over its future. Fed officials are 'strongly' divided on December rate cut. Nutrien selects US site for potash terminal.  The world's richest nations are pulling back from global development efforts, a study shows. China weighs new property stimulus package as crisis lingers. Germany on track for Q4 growth, Bundesbank says.

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In currency markets. The yen’s weakness remains driven by domestic dynamics, with rising Japanese yields and the increasing risk of official pushback providing potential pockets of support. The euro and sterling show room to consolidate if incoming regional data steadies and growth indicators begin to firm. The Swiss franc, meanwhile, has slipped to 10-day lows, but could regain traction should safe-haven flows re-emerge—particularly if global risk appetite cools after its recent tech-led boost. CNY & Asian currencies slipped 0.1% on average against the USD. Trading currencies continue under pressure, with ZAR, JPY, CZK, and PLN weakening 0.3%, MXN, AUD, CHF, and DKK falling 0.2%, KWD, SEK, and NOK down 0.1%, and NZD flat against the USD.

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In commodity markets. Oil prices strengthened 0.9%. Natural Gas prices fell 0.6%. Gold & Silver prices weakened 0.8%. Copper & Soybean prices down 0.1%, while Coffee prices rallied 1.5%, and Wheat prices firmed 0.6%.

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CAD continues to trade under pressure amid a strengthening USD, with markets increasingly expecting the Federal Reserve to keep rates on hold for the remainder of 2025. Today’s delayed U.S. nonfarm payrolls report carries potential to reinforce that stance, as anything other than a significant downside surprise may keep the dollar supported. Domestically, the Bank of Canada’s call for a coordinated, economy-wide effort to tackle persistently weak productivity highlights ongoing structural headwinds for the Canadian economy. Taken together, the backdrop leaves the loonie vulnerable as both global and domestic factors tilt in favour of further USD resilience.

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EURCAD is capped below 1.6200, with improving Euro Area consumer confidence offering only modest support against a still-soft technical backdrop. Investors are staying cautious ahead of Friday’s remarks from ECB President Lagarde and key EU and German PMI releases, which could provide the next directional catalyst for the euro.

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EUR continues to slide toward the 1.1500 area, pressured by renewed USD strength as markets scale back expectations for a December Fed rate cut and turn their attention to today’s U.S. Nonfarm Payrolls report. Although the September figures are dated, they remain an important labour-market snapshot ahead of the Fed’s December meeting and could shape short-term dollar momentum. At the same time, euro sentiment stays fragile, with investors cautious ahead of Friday’s key EU and German PMI releases and ECB President Lagarde’s speech, both of which could determine whether the euro finds any near-term support.

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GBPEUR firmed in early trading as the Pound stabilized after Wednesday’s sharp sell-off, even though BoE rate-cut expectations have continued to intensify following softer UK inflation and labour-market data. The Euro still retains a slight advantage, with policy divergence favouring the ECB’s comparatively steadier stance and leaving Sterling sensitive to upcoming UK retail sales and PMI releases.

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GBP is flat against the USD, rebounding after Wednesday’s weakness, though BoE rate-cut expectations continue to build following softer UK inflation and labour-market data. The Euro retains a slight advantage, with policy divergence favouring the ECB’s comparatively steadier stance and adding pressure on Sterling. Investors remain cautious ahead of upcoming UK retail sales, PMI figures, and fiscal signals that could influence the near-term direction of GBP/EUR. Overall, the pair remains range-bound, with Sterling’s upside limited unless data surprises or a shift in BoE rhetoric emerges.