The Morning Update

The USD retreats, oil prices tumble, equity markets are up, and US yields are mixed ahead of a busy week of earnings, jobs report and the US Midterms. The U.S. dollar eases as investors trim positions ahead of Tuesday’s U.S. midterm elections, while improving risk sentiment and a sharp decline in oil prices reduce demand for the greenback as a safe haven. Attention later this week also turns to October U.S. employment data, which will be important in shaping expectations for the Fed’s next move. Global equity markets are broadly firmer, with U.S. futures rebounding as falling oil prices improve risk sentiment and ease some inflation concerns, although lingering doubts around heavy AI spending keep the recovery measured. European shares are little changed, while Chinese equities gain on expectations of further market support. Elsewhere, oil prices tumble as hopes for renewed U.S.-Iran diplomacy reduce immediate supply-risk concerns, while gold and Bitcoin are broadly steady. Today’s economic calendar includes Canadian S&P Global Manufacturing PMI, U.S. ISM Manufacturing PMI and its employment and new orders components, alongside speeches from ECB & Fed officials.

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News Headlines. Canada-India $5.5 billion bank takeover attracts opposition from workers and politicians. Rubio says Trump wants to solve Iran war 'peacefully' even as both sides prepare for strikes. US crude falls below $100 amid reports of US-Iran diplomatic efforts. Global AI sell-off eases after NASDAQ's worst month in over a year. The US pushes Russian gas to return to Europe via Ukraine. German ministers vow tough response to Frankfurt riots and looting. Mitsubishi to sell down LNG Canada stake to Blackstone funds for $1.6 billion. Trump says US & Canada have 'concept' of a new trade deal. PM Carney calls six bi-elections in December.

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In currency markets. Against the USD, NOK and KWD underperform as the sharp drop in oil prices weighs on currencies linked to energy revenues, with NOK particularly sensitive to weaker crude. ZAR and CHF outperform, with the rand supported by firmer precious-metal prices and improved risk appetite, while the franc benefits from defensive demand ahead of the U.S. midterms and a heavy week of central-bank decisions.

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In commodity markets. WTI -4.11% | Nat Gas +1.31% | Gold +0.28% | Silver +2.10% | Copper +0.71% | Palladium -1.18% | Coffee +3.06% | Cocoa -0.24% | Soybeans -0.14% | Wheat +0.21%

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CAD starts November broadly flat after ending October near six-week highs, with last week’s BoC hike and expectations for further tightening still providing underlying support. A sharp pullback in oil prices is limiting the loonie, but improving Canada-U.S. trade rhetoric is helping offset some of that pressure as both sides signal progress toward a potential deal. Caution ahead of Tuesday’s U.S. midterm elections is also keeping broader FX moves contained as investors reduce risk and wait for greater political clarity. Today’s Canadian Manufacturing PMI is the next domestic focus, with markets looking for confirmation that factory activity remains in expansion territory.

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EURCAD strengthens by more than 100 points as a firmer euro combines with renewed pressure on CAD. German Manufacturing PMI was confirmed at a robust 54.2, supporting the euro, while the loonie is being weighed by a sharp pullback in oil prices as OPEC+ holds production targets steady and Middle East diplomacy reduces immediate supply concerns. The move is being amplified by position adjustment after CAD’s strong October rally, with markets also reassessing how much additional BoC tightening is likely after last week’s hike.

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EUR firms against the USD as lower oil prices ease pressure on the energy-importing euro area and last week’s stronger-than-expected Eurozone GDP data continue to provide some support. The move comes despite a sharp 2.0% drop in German retail sales and Fitch’s decision to revise France’s outlook to negative, both of which underline lingering concerns around domestic demand and fiscal risks. A softer USD ahead of Tuesday’s U.S. midterm elections is also helping the single currency, while today’s Eurozone manufacturing PMIs and U.S. ISM Manufacturing report provide the next near-term catalysts.

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GBPEUR eases in early trading as the euro outperforms on lower oil prices and a softer USD backdrop, while GBP remains comparatively subdued at the start of BoE policy week. Weak German retail sales are limiting euro upside, but the broader cross still reflects a modest unwinding of GBP’s recent outperformance ahead of Thursday’s BoE decision.

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GBP eases from recent highs despite October’s stronger manufacturing PMI, with traders increasingly cautious ahead of Thursday’s BoE decision. Markets are close to fully pricing a 25bp hike to 4.0%, but the vote split and Governor Bailey’s guidance on whether tightening continues into early 2027 will be crucial. Beyond the BoE, Wednesday’s UK Services PMI will provide the main domestic growth signal, while Tuesday’s U.S. midterms and a heavy U.S. labour calendar — JOLTS, ADP and Friday’s payrolls/unemployment report — are likely to drive the broader USD side of the pair.