The USD holds steady, oil prices rally, equity markets are down, and US yields are mixed as risk sentiment wanes. The U.S. dollar holds broadly steady as investors balance softer Treasury yields and reduced expectations for an October Fed hike against lingering geopolitical and inflation concerns. Attention now turns to today’s U.S. jobless claims for fresh evidence on labour-market conditions, followed by Friday’s flash Manufacturing and Services PMI reports for a broader read on economic momentum. Global equity markets are broadly lower as disappointing technology earnings and renewed concerns over returns from heavy AI investment trigger a wider retreat from risk assets. U.S. futures and European shares fall sharply while Chinese equities slide deeper into bear-market territory, with surging oil prices and escalating Middle East tensions adding to inflation and growth concerns. Elsewhere, oil prices rally as escalating Middle East tensions heighten supply-disruption concerns, while gold and Bitcoin weaken as broader risk aversion and shifting rate expectations weigh on both assets. Today’s economic calendar includes U.S. initial jobless claims, Canadian Industrial Product and Raw Material Price Indices, Eurozone preliminary Consumer Confidence, alongside speeches from BoE Governor Bailey and the ECB’s Panetta.
News Headlines. PHP cyber-security issue hitting sites worldwide prompts 'millions' of hacking attempts. Nvidia CEO Jensen Huang says neocloud demand is 'off the charts' but capital is scare. Nasdaq futures down 1.8% as investors digest earnings fro Meta and Tesla. Treasury yields fall as investors weigh Middle East tensions and await jobs data. The world's largest wealth fund posts $30 billion loss after bond market turbulence. Global stocks tumble as oil prices rise.
In currency markets. Against the USD, JPY is the standout performer, posting its strongest rally in a month as fragile equity markets, elevated oil prices and renewed concerns around AI valuations drive safe-haven demand. Falling U.S. Treasury yields and reduced expectations for further near-term Fed tightening are also weighing on the dollar, while the yen benefits from expectations that the BoJ will maintain a gradual path toward higher rates. China steps up 'grey zone' tactics to isolate Taiwan. The US embassy accuses Canadian politicians of interfering in American elections.
In commodity markets. WTI +2.46% | Nat Gas -1.33% | Gold -1.08% | Silver -2.92% | Copper -2.22% | Palladium -3.20% | Coffee -2.31% | Cocoa -2.11% | Soybeans +0.14% | Wheat +0.24%
CAD edges higher in early trading, holding close to four-week highs as markets continue to price roughly an 80% chance of a BoC rate hike next week. Strengthening oil prices are providing an additional tailwind, while today’s Canadian industrial and raw-material price data and U.S. jobless claims will help shape near-term rate expectations. A softer USD backdrop is also helping the loonie retain its recent gains despite lingering uncertainty around Canada-U.S. trade relations. Attention then shifts to Friday’s Canadian retail sales and U.S. flash PMI reports for a broader read on growth momentum.
EURCAD remains under selling pressure as persistent French political and fiscal concerns weigh on the euro, with French bond spreads remaining sharply elevated. CAD continues to draw support from higher oil prices and a significant repricing of BoC expectations, with markets now largely pricing a 25bp rate hike next week. The combination of euro-area political risk and a firmer Canadian rate and commodity backdrop keeps the cross biased lower.
EUR slips in early trading, with persistent French fiscal concerns and elevated borrowing costs continuing to limit demand for the single currency. French 10-year yields remain near multi-decade highs, while expectations that the ECB will hold rates next week leave little fresh support from monetary policy. A softer USD and reduced expectations for an October Fed hike are helping contain the downside, with ECB Panetta’s remarks and U.S. labour-market data the next near-term catalysts.
GBPEUR holds broadly steady near recent highs as hotter UK inflation keeps expectations for a November BoE rate hike firmly in place, while Bailey has stressed that persistent energy-driven inflation could eventually require a policy response. On the euro side, the ECB is expected to hold rates next week, with recent officials continuing to emphasize inflation risks rather than offering support for widening sovereign spreads. French fiscal concerns remain a key drag on the single currency, with 10-year yields above 5% and the spread over German Bunds near multi-year extremes. Friday’s UK and euro-area PMI reports are the next important catalysts for the cross.
GBP edges lower against the USD as traders consolidate recent gains ahead of further comments from BoE Governor Andrew Bailey. Hotter UK inflation has left markets pricing a November BoE hike with high conviction, but Bailey’s remarks are being watched for whether he reinforces that tightening bias or stresses the need to remain data dependent. GBP remains supported by the wider UK-U.S. rate outlook, with the Fed expected to pause next week, although renewed geopolitical risk and softer equity sentiment are providing some support to the USD.
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