The Morning Update

The USD holds steady, oil prices weaken, equity markets rise, and US yields are mixed as investors grow more optimistic ahead of earnings season. The U.S. dollar steadied after recent gains, with softer U.S. jobs data having reduced expectations for an October Fed hike. Attention now turns to Wednesday’s FOMC minutes for further detail on how strongly policymakers favour additional tightening later this year. Global equity markets moved higher as pressure in bond markets eased and investors turned more constructive ahead of earnings season. European shares advanced, U.S. futures edged higher, and most Asian markets gained, while strong expectations around AI-related earnings continued to support technology shares. Elsewhere, oil prices weakened as resilient Middle East exports and emergency reserve releases eased immediate supply concerns. Gold edged higher, while bitcoin also firmed as risk appetite improved and expectations for an imminent Fed hike continued to recede. Today sees a quiet US economic calendar, so focus will be on ECB & Fed speakers, alongside the CAD Ivey PMI report for intraday direction.

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News Headlines. Trump allows cheaper, dyed diesel on highways to blunt historic fuel-cost spike ahead of midterms. Student riots engulf France as Le Pen vows fiscal turnaround. Yemen forces reclaim key Red Sea port city of Mokha from Iran-backed Houthis. Treasury yields fall as investors anticipate FOMC minutes. German far right set to secure first-ever regional parliament president. Stocks climb, yields retreat from multi-decade highs. Euro trades around 17-month lows amid French debt worries, while dollar holds steady. Quebec Separatists win power in new challenge for Canada's Carney. BoE's Mann says labour market isn't weak enough to tame inflation. Oil falls on signs of increased shipments from the Middle East.

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In currency markets. Against the USD, ZAR is the standout performer this morning, supported by firm precious-metal prices and improving risk appetite. CNY is broadly flat as Chinese markets remain closed for the Golden Week holiday, limiting onshore activity and leaving offshore yuan trading subdued, while JPY is lagging its peers as concerns around Japan’s fiscal outlook continue to weigh on the yen.

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In commodity markets. WTI -1.88% | Nat Gas +0.23% | Gold +0.52% | Silver Flat | Copper -0.01% | Palladium -0.89% | Coffee +0.24% | Cocoa -0.66% | Soybeans +0.43% | Wheat +0.87%

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CAD steadies near 18-month lows after broad USD strength, softer Canadian services activity and weaker oil prices keeping pressure on the loonie, while speculative net short positions have risen sharply, highlighting increasingly bearish market positioning. With domestic growth still subdued and interest-rate spreads expected to widen further in favour of the USD, pressure on CAD is likely to persist, leaving today’s Ivey PMI report as the key near-term domestic focus.

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EURCAD firms in early trading, rebounding through 1.6000 as the euro recovers from yesterday’s France-driven selloff while weaker oil prices continue to pressure the Canadian dollar. French fiscal concerns remain a headwind and euro-area Retail Sales have since disappointed expectations, but the single currency is finding some support from the ECB’s continued focus on inflation risks, with Lane stressing that energy prices remain above the Bank’s baseline assumptions.

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EUR edges off 17-month lows against the USD as euro-zone bond markets stabilize following Monday’s sharp France-driven selloff. Concerns over French debt, political gridlock and the upcoming Spanish election remain significant headwinds, while softer-than-expected euro-area Retail Sales have added to the cautious tone. The IMF also warned that Central and Eastern Europe’s growth potential has slowed materially, citing weaker export prospects, demographic pressures and the need for structural reforms across the region.

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GBPEUR holds broadly steady as the euro stabilizes following the recent France-driven selloff, while GBP remains supported by relatively hawkish BoE expectations. Mann has argued that financial conditions are not yet sufficiently tight and that policymakers may ultimately need to follow through with further rate increases, helping to underpin GBP even as euro-zone political and fiscal concerns continue to weigh on the single currency.

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GBP firms in early trading against the USD as the greenback gives back a small portion of its recent gains and markets continue to price a relatively tight BoE policy stance amid sticky inflation pressures. UK Construction PMI improved in September but remained in contraction territory, leaving the currency’s near-term direction more dependent on the broader USD tone and upcoming FOMC Minutes than on domestic data.