The Morning Update

The USD edges higher, oil prices fall, while equity markets and US yields are mixed ahead of US jobs and Nvidia earnings. The USD remains choppy as investors sought safety following a global equity selloff, with markets increasingly focused on deteriorating US labour signals. A surge in jobless claims — the first significant data release since the government shutdown — deepened concerns about economic momentum and left traders looking to Thursday’s delayed nonfarm payrolls report for clearer direction on the Fed’s next move. Expectations for a December rate cut have edged slightly higher. Still, divisions within the Federal Reserve and uncertainty about the true state of the labour market keep the USD on an uneven footing. Global equity markets were mixed on Wednesday, with European stocks wavering and mild losses across Asia, while US futures moved higher, helping steady sentiment after several days of declines. S&P 500 futures rose around 0.3%, pausing the recent selloff as investors awaited Nvidia’s earnings, a key test for stretched tech valuations and overall market direction. Treasuries held recent haven-driven gains, and the dollar edged firmer, while traders looked to upcoming Federal Reserve minutes for guidance amid reduced expectations for a December rate cut. Elsewhere, oil prices weakened amid lingering concerns over global growth, while gold strengthened as investors sought safe-haven assets amid market jitters. Meanwhile, Bitcoin tumbled towards $90,000 as risk-off sentiment gripped markets, with traders retreating from high-beta assets amid concerns over Fed policy and stretched tech valuations. Today's focus will be on the FOMC minutes and several Fed speakers, which will provide intraday direction for currency markets.

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In the news. Iranian nuclear experts held a second covert meeting with the Russian weapons institute. Nvidia shares set for $300bn swing around high-stakes earnings. Europe's defence spending spree must fund domestic AI, official says. UK inflation falls to 3.6% in October. Japan's borrowing costs are at their highest in decades on fears of a public spending surge. Canada announces massive jump in funding to the European Space Agency. Canadian housing starts fall more than expected in October. US Thanksgiving dinner cost drops for third year, Farm Bureau says. The West scrambles to fill the heavy-rare-earth gap as China's rivalry deepens. Goldman's Waldron sees more market pullback and Subprime loan risk. Bitcoin slide spurs record withdrawals from BlackRock's IBIT. Target cuts profit outlook as shoppers look for deals, visit stores less often.

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In currency markets. The Japanese yen traded flat in early dealings, showing little reaction to recent data and remaining confined to a tight range. The New Zealand dollar was similarly steady, lacking clear direction amid muted market signals. The Chinese yuan also held largely unchanged as traders awaited further policy cues, contributing to a generally subdued tone across Asian currencies. CNY is flat, while Asian currencies eased 0.2% on average against the USD. Trading currencies continue under pressure, with PLN tumbling 0.7%, NZD weakening 0.55%, SEK, AUD, and JPY falling 0.35%, NOK easing 0.2%, CHF down 0.1% DKK, ZAR, CZK flat, and MXN up 0.1% against the USD.

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In commodity markets. Oil and Coffee prices weakened 1%. Natural Gas prices firmed 1%. Gold & Copper prices strengthened 1.2%. Silver prices rallied 3%. Soybean prices fell 0.6%, and Wheat prices rose 0.2%.

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CAD eased in early trading, giving back a portion of Tuesday’s strong rally that had lifted the loonie to a near three-week high. Markets had surged the previous day on relief after the federal budget passed, easing fears of a snap election, even as Canadian housing starts fell 17% in October to an annualized 232,765 units. With oil prices declining today, some support for the commodity-linked currency has faded, leaving CAD to consolidate after its biggest single-day gain in three months. TSX futures are pointing higher this morning, supported by stronger gold and copper prices, even as the index remains pressured after closing at an 11-day low amid ongoing concerns about stretched tech and AI valuations. Investor focus now turns to Nvidia’s earnings, Thursday’s delayed U.S. labour data, and comments from BoC Deputy Governor Vincent for direction on market and policy sentiment.

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EURCAD has edged higher in early trading, supported by euro buying after recent inflation data steadied expectations for the ECB, while the Canadian dollar is consolidating after pulling back from Tuesday’s sharp rally. Softer risk sentiment and today’s decline in oil prices have taken some momentum out of the loonie, even as markets continue to monitor Canadian housing data and the implications of the recently passed federal budget. With both currencies reacting to shifting policy expectations, investors are now watching upcoming Eurozone guidance and Bank of Canada inflation signals for the next directional cue.

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EUR eased toward 1.1600 in early European trading as renewed U.S. dollar demand and cautious market sentiment weighed on the pair. Despite relatively resilient inflation figures in the Eurozone, the euro remains under pressure amid a risk-averse environment and waning hopes for a quick policy turnaround by the European Central Bank. Support for the euro remains fragile while investors await upcoming data and central-bank commentary for clearer direction.

GBPEUR is weaker in early trading as markets position ahead of key UK CPI data, which could influence expectations for the Bank of England’s next move. At the same time, the euro is facing pressure ahead of today’s Eurozone inflation release and an ECB non-monetary policy meeting, keeping sentiment tilted against the single currency. Overall, the cross remains sensitive to incoming UK and EU data, with both sides awaiting fresh direction.

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GBP edged lower on Wednesday after UK inflation cooled to 3.6% in October as expected, strengthening the view that the Bank of England is likely to cut rates next month. GBP/USD remains subdued below 1.3150, with the pound still weighed down by recent fiscal uncertainty and soft UK economic indicators, including weak GDP and labour-market data. Traders now turn their attention to upcoming U.S. data releases and broader risk sentiment, which will continue to shape the currency's near-term direction.