The Morning Update

The USD is steady, oil prices ease, equity markets are mixed, and US yields rise ahead of the key Fed interest rate decision. The U.S. dollar traded broadly steady in early trading as investors remained on the sidelines ahead of the Federal Reserve's first policy decision under Chair Kevin Warsh. While no change in interest rates is expected, markets will closely scrutinize the Fed's statement, economic projections and press conference for any signs that policymakers are becoming more hawkish on inflation risks. With uncertainty surrounding the future policy path, the greenback remains range-bound ahead of what is expected to be the week's key market event. Global equity markets traded mixed as investors remained cautious ahead of Wednesday's Federal Reserve interest rate decision and comments from Fed Chair Kevin Warsh. Despite the subdued sentiment, major benchmarks remained near record highs, with Japan's Nikkei, South Korea's Kospi, and the Dow Jones Industrial Average recently reaching new peaks. Meanwhile, SpaceX continued to attract strong investor interest, extending gains following its highly successful market debut. Elsewhere, Gold, Bitcoin, and oil prices edged lower in early trading as investors adopted a cautious stance ahead of the Federal Reserve's interest rate decision. Oil fell on expectations of improved supply, Bitcoin slipped modestly, and gold traded slightly lower as markets awaited guidance on the future path of interest rates. Investors will be focused on the US Interest rate decision, and Fed Chair Warsh's comments will help drive the direction for currency markets.

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News Headlines. President Trump battles claims his Iran deal is worse than Obama's. SpaceX leapfrogs Amazon to become the world's fifth-most valuable company. Economists bet on higher rates as Kevin Warsh takes reins at the Fed. Middle East peace deal could herald oil glut next year, IEA says. Poland and the World Bank agree to end development loans. Russian warship fires warning shots towards yacht in English Channel. Iran deal includes a $300 billion fund, more than half of which has already been committed. G7 leaders demand ceasefire in Lebanon, welcome Iran deal. Carney and Trump were caught on a hot mic discussing Chinese EVs at the G7 summit.

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In currency markets. Attention now turns to the Bank of England and Bank of Japan, with the BoE expected to leave rates unchanged while investors watch for guidance following softer UK inflation data. Meanwhile, the BOJ recently raised rates to a 31-year high but offered few clues on future tightening, leaving the yen near multi-decade lows and keeping intervention concerns in focus.

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In commodity markets. Oil and Gold prices slip 0.1%. Natural Gas and Soybean prices gained 0.65%. Silver prices are flat. Copper prices firmed 0.45%. Coffee prices weakened 1.17%, while Wheat prices strengthened 1%.

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CAD holds near a seven-month low against the U.S. dollar as weaker oil prices continue to weigh on sentiment despite signs of strength in the domestic housing market. A widening interest-rate gap in favour of the U.S., softer recent Canadian economic data, and lower crude prices are keeping pressure on the loonie as investors await further direction from the Federal Reserve.

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EURCAD holds steady near 1.6250, hovering around multi-month highs as the euro remains supported by expectations of further ECB policy tightening. Resilient Eurozone inflation continues to underpin the single currency and reinforce the case for additional rate hikes. Meanwhile, weaker oil prices and softer Canadian economic data are keeping pressure on the loonie, helping sustain EUR/CAD's recent strength.

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EUR holds above the 1.1600 level as traders remain cautious ahead of the Federal Reserve's policy decision and guidance on the future path of U.S. interest rates. The euro continues to draw support from expectations of further European Central Bank tightening, with policymakers signalling concerns over persistent inflation pressures. However, upside momentum remains limited as escalating tensions in the Middle East boost safe-haven demand for the U.S. dollar and increase uncertainty across global financial markets.

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GBPEUR eases as softer UK inflation data weighs on the pound and reinforces expectations that the Bank of England will leave rates unchanged this week. Meanwhile, the euro remains supported by the ECB's recent rate hike and expectations of further policy tightening.

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GBP slips toward 1.3400 after softer-than-expected UK inflation data dampened expectations for further Bank of England rate hikes and weighed on the pound. The downside is being tempered by a weaker U.S. dollar and improved risk sentiment ahead of the Federal Reserve's policy decision.

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