The Morning Update

The USD holds steady, oil prices decline, equity markets are mixed, and U.S. yields rise amid cautious market sentiment. The U.S. dollar holds steady near 19-month highs and is on track for its strongest week in two months as hotter inflation, hawkish Fed commentary and rising Treasury yields reinforce expectations for further tightening. Renewed Middle East tension and firmer oil prices are also supporting the greenback, while markets continue to weigh a small but rising chance of a 50bp Fed hike in December. Global equity markets are mixed as investors remain cautious ahead of today’s U.S. producer-price data, with S&P 500 futures slightly higher and Nasdaq futures little changed. The broader tone remains resilient despite this week’s Nvidia turmoil, while higher rate expectations continue to limit upside. Elsewhere, oil prices weaken as signs of a looser global supply balance outweigh recent geopolitical concerns, while Bitcoin drops below $70,000 as higher inflation and interest-rate expectations pressure risk assets. Gold rebounds modestly after three days of losses as investors take advantage of the recent pullback. Today’s economic calendar includes U.S. PPI and Core PPI inflation, Canadian Manufacturing Sales and Wholesale Trade, alongside speeches from the ECB’s Schnabel and Fed officials Bowman and Daly.

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News Headlines. Widespread Microsoft outage takes down Outlook and other 365 services. Canada threatens Stellantis as Trump trade war reshapes Jeep production plans. Nvidia stock inches higher as investors continue to weigh Jensen Huang's departure. US lawmakers pile pressure on Lutnick as Nvidia scandal widens. Global oil markets swing to surplus as Gulf shipments rebound. The US cannot reach a deal to end Ukraine war without Europe, say Kushner. US home sales fall to the lowest level since 2010 a mortgage rate soar. Canada and the US have spoken 'within the past few days' about potential trade deal; Greer.

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In currency markets. Against the USD, most major currencies remain subdued, with JPY hovering near the psychologically important 160 level and intervention risk increasingly in focus after fresh warnings from Japanese officials. AUD also remains under pressure, extending its position as the weakest G10 currency this month as higher U.S. yields and expectations for eventual RBA easing weigh on the currency.

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In commodity markets. WTI -0.51% | Nat Gas -2.22% | Gold +0.25% | Silver -0.41% | Copper -0.77% | Palladium +0.86% | Coffee -0.33% | Cocoa +0.31% | Soybeans +1.35% | Wheat +1.84%

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CAD is sidelined in early trading near recent lows as markets await today’s U.S. PPI report, which could further influence expectations for the Fed’s December decision. The loonie remains weighed by last week’s weak Canadian jobs data and a still-wide Canada-U.S. rate differential, although comments from U.S. Trade Representative Jamieson Greer that talks with Canada have continued in recent days are providing some support to sentiment. Oil is also offering limited help after its recent volatility, leaving U.S. inflation data as the main near-term driver.

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EURCAD is broadly flat in early trading around the 1.576 area, with both currencies lacking a clear catalyst. The cross has eased from earlier-week highs as CAD stabilizes, while the euro remains constrained by the stronger USD and softer regional momentum, leaving near-term direction dependent on today’s U.S. PPI and broader rate moves.

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EUR remains under pressure near 19-month lows and is on track for a third consecutive weekly decline as a sharply stronger USD and rising U.S. yields dominate. Eurozone Q3 growth beat expectations at 0.6%, but softer employment growth and a larger-than-expected trade deficit tempered the positive surprise. Attention now turns to today’s U.S. PPI report, with another firm inflation reading likely to reinforce expectations for aggressive Fed tightening and keep EUR/USD under pressure.

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GBPEUR trades broadly steady as markets balance a still-hawkish BoE backdrop against mixed Eurozone data and ongoing ECB commentary. UK rate expectations remain supported after the BoE’s recent hike, while the euro has been helped by firmer Q3 growth but held back by weaker employment and trade data; several ECB officials, including Isabel Schnabel, are also speaking today, keeping December policy expectations in focus.

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GBP remains under pressure near four-week lows against the USD as hotter U.S. inflation, rising Treasury yields and increasingly hawkish Fed expectations keep the greenback firmly supported. Bets for another BoE hike in December are helping limit the downside, but have so far failed to generate a meaningful recovery, leaving GBP/USD vulnerable while U.S. rate expectations and Middle East risks remain elevated.