The Morning Update

The USD remains steady, while oil prices continue under pressure. Equity markets and US yields are mixed due to the US shutdown. The USD steadies at a one-week low as the government shutdown rattles markets and raises doubts about the release of key labour data critical for the Fed’s policy outlook. Safe-haven demand lifted the yen and Swiss franc, while uncertainty over the shutdown’s economic impact added to investor caution. U.S. stock futures fell as the first government shutdown in nearly seven years disrupted operations and threatened a blackout in economic data. S&P 500 contracts dropped 0.6% after the index’s strongest September in 15 years, while Nasdaq 100 futures slid 0.7%, with tech stocks leading. In Europe, the Stoxx 600 edged close to an all-time high, supported by gains in drugmakers after Pfizer secured relief from U.S. tariff threats. With key releases, including jobless claims and September’s nonfarm payrolls, now delayed, investors worry the loss of economic visibility will complicate the Fed's monetary policy outlook. “If we didn’t get the data, we didn’t get the jobs report, and furthermore, we didn’t get the inflation report, I think that would definitely become a real risk,” Hebe Chen, market analyst at Vantage Markets, said on Bloomberg Television. “And that risk, I have to say, the market is yet to price in at this stage.” Elsewhere, oil prices weaken, while Bitcoin rallies 2% and gold neared $3,900 an ounce to sustain a record-breaking rally. Investors will be focused on updates on the US shutdown for direction today.

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In other news. Dow futures fall 200 points after the US government shuts down. The US begins a government shutdown with Trump and Democrats at an impasse. Eurozone inflation rises to 2.2% in September. Stablecoins could help shift the financial system from commercial lending, the BoE Governor says. Argentine assets hit by fresh selling amid worries over US bailout. Russia's hybrid war is 'only the beginning', warns Danish PM. Trump says he pitched 51st state offer to Canada again in Golden Dome talks. Europe will lose out to China in e-trucks without EU action, warns industry. Canada Post must table new offers quickly amid strike, minister urges. GM increases production in Indiana, as it cuts jobs north of the border.

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In currency markets. The USD came under broad pressure, with the rand firming as investors moved back into higher-yielding assets. The yen also strengthened, as caution in global markets encouraged safe-haven demand. The Norwegian krone gained ground, supported by stronger commodity flows and favourable rate dynamics. Overall, the dollar’s weakness reflects a mix of shifting risk sentiment amid the US government shutdown. CNY is flat, while Asian currencies on average firmed by 0.15% against the USD. Trading currencies are mixed, with CHF & DKK down 0.15%. AUD, SEK and CZK flat, MXN, and KWD up 0.15%, NZD, and NOK firmed by 0.25%, ZAR strengthened by 0.45%, and the JPY rallied 0.6% against the USD.

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In commodity markets. Oil prices slipped 0.2%. Natural Gas prices rallied 2.4%. Gold prices gained by 1%. Silver prices strengthened by 1.6%. Copper prices are flat. Coffee prices tumbled 1.5%, Soybean prices eased by 0.5%, and Wheat prices fell 0.9%.

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CAD slipped in early trading, edging toward 1.3950 as rate differentials and a stronger greenback weighed on sentiment. The TSX, meanwhile, closed at a record high, boosted by corporate news and broader risk appetite. Markets remain focused on the Bank of Canada, which has signalled room for further easing if economic risks build. The contrast between a weakening loonie and resilient equities highlights diverging pressures in Canada’s outlook.

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EURCAD opened steady, holding near multi-year highs as demand for the euro remained firm. Fresh Eurozone inflation data rose to 2.2%, adding pressure on the ECB to keep rates unchanged. Policymakers face the challenge of balancing a stronger currency with the need to maintain price stability. Unless Canadian data or oil provides support, the bias for EUR/CAD remains tilted higher.

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EUR held steady below 1.1750 in early trading, supported by U.S. dollar weakness tied to the government shutdown and the risk of delayed economic data. Preliminary Eurozone inflation figures showed an uptick, reinforcing expectations that the ECB will keep rates on hold. While inflation pressures limited hopes for further easing, the euro’s gains remain cautious.

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GBPEUR traded firmer as the pound found support despite cautious remarks from BoE policymaker Catherine Mann, who warned about persistent inflation and the need to review the pace of quantitative tightening. Her comments suggested the BoE may remain wary of easing too quickly, lending some stability to the pound. Meanwhile, Eurozone inflation data and other releases are in focus, with any upside surprise expected to bolster the euro. For now, the pound holds a modest edge, keeping GBP/EUR on the stronger side in early trading.

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GBP is firmer against the U.S. dollar as markets weigh diverging central bank outlooks. BoE policymaker Catherine Mann warned that UK inflation could prove more persistent than expected, reinforcing caution on the pace of rate cuts. In contrast, the dollar remains under pressure from the ongoing U.S. government shutdown, which has raised doubts over the release of this week’s nonfarm payrolls report. Overall, GBP/USD remains supported by dollar weakness, though volatility may persist until clarity emerges on U.S. data and Fed policy.