The USD retreats, oil prices firm, while equity markets and US yields are mixed amid Mideast uncertainty and caution ahead of Friday's key jobs report. The U.S. dollar retreats in early trading as oil prices stabilize and Treasury yields ease from recent highs, although expectations for a September Fed rate hike continue to provide underlying support. Softer U.S. ADP employment data yesterday has shifted attention firmly toward Friday’s nonfarm payrolls report for the next major signal on the Fed outlook. Global equity markets are broadly steady as easing bond yields and a pause in oil’s recent rally provide some relief following several cautious sessions. U.S. equity futures edge higher while European stocks advance, although elevated energy prices and continuing U.S.-Iran tensions keep overall risk sentiment guarded.Elsewhere, oil prices stabilize after a three-day rally as concerns over Middle East supply disruptions ease slightly, while gold rebounds as the U.S. dollar and Treasury yields retreat. Bitcoin also recovers modestly following its recent weakness.Today’s economic calendar includes U.S. weekly jobless claims, the trade balance, ISM Services PMI and factory-related data, with markets increasingly focused on Friday’s U.S. nonfarm payrolls report.
News Headlines. Putin floars 'chance' at peace, NATO chief warns Russia is becoming 'increasingly reckless'. Iran strikes Kuwait as Trump says renewed Mideast hostilities will not last 'too long'. Dutch central bank moves gold bars out of the US., citing 'crisis preparedness'. China's slowdown pushes New Zealand exporters to new markets. Shipping stocks hit decade highs as Hormuz disruption grinds on. Yen jumps as traders bet on Japan interest rate rises. Struggling Republicans urge Trump to open Maga Inc's $400mn war chest. Toronto home sales fall in August for the first time in six months. TSX rebounded from four-week low as mining shares rally.
In currency markets. Against the USD, the Japanese yen is the clear outperformer, rallying more than 1% as investors increase expectations for a faster pace of BoJ tightening following hawkish comments from policymaker Hajime Takata, with a September rate hike now nearly fully priced in. Elsewhere, the euro, GBP, NZD and CAD are modestly firmer as the broader U.S. dollar retreats ahead of Friday’s nonfarm payrolls report, although expectations for a September Fed rate hike continue to limit the dollar’s downside.
In commodity markets. WTI +0.51% | Nat Gas +1.08% | Gold +1.51% | Silver +1.38% | Copper +0.68% | Palladium +1.80% | Coffee -1.38% | Cocoa +0.29% | Soybeans -0.90% | Wheat -3.29%
CAD rebounded sharply from a near three-week low after the Bank of Canada struck a more hawkish tone on inflation, with Governor Macklem signalling policymakers are prepared to raise rates multiple times if necessary. Markets now price a 44% chance of a rate hike next month, up from 24% before the decision, with a move fully priced by year-end, while higher oil prices provided additional support. Attention now turns to Canadian trade data today and employment data on Friday for further direction.
EURCAD held steady in early trading as the euro remained broadly stable following mixed Eurozone services data, with expectations for further ECB tightening providing some underlying support. Meanwhile, CAD retained much of yesterday’s rebound after the Bank of Canada adopted a more hawkish stance on inflation, while higher oil prices also supported the loonie. With both currencies finding support from their respective central-bank outlooks, the cross remains broadly range-bound for now.
EUR breached 1.1600 in early trading but struggled to extend gains after softer-than-expected Eurozone services activity tempered optimism over the region’s economic outlook. The single currency was supported by a modestly weaker U.S. dollar following softer U.S. private-sector employment data. However, expectations that markets may be overestimating the prospect of further ECB tightening continue to limit upside. Attention now turns to upcoming Eurozone inflation data and further signals from ECB policymakers for direction.
GBPEUR held broadly steady in early trading as both currencies found support from increasingly hawkish interest-rate expectations. The pound remains underpinned by expectations that the Bank of England could raise rates before year-end, while the euro continues to benefit from expectations of further ECB tightening. With the policy outlook for both central banks relatively firm, the cross remains largely range-bound as investors await fresh economic data for direction.
GBP strengthened toward 1.3500 in early trading, supported by a softer U.S. dollar following weaker-than-expected U.S. private payrolls data. However, gains remain capped by heightened Middle East tensions and lingering UK fiscal concerns, which continue to temper risk appetite. Expectations that the Bank of England could raise rates by 25 basis points before year-end amid persistent inflation pressures are providing underlying support for the pound.
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