The USD holds steady, oil prices weaken, equity markets are up, and US yields rise as risk-on sentiment improves. The U.S. dollar is largely sidelined this morning, easing modestly from recent highs as oil prices pull back and improving geopolitical sentiment reduces some of the recent safe-haven demand. The broader USD backdrop remains supported by expectations for another Fed rate increase later this year, but softer recent U.S. data and reduced odds of an October hike are keeping the currency contained ahead of today’s consumer-sentiment data and further Fed commentary. Global equity markets rebound as lower oil prices ease inflation concerns and renewed optimism around the AI sector supports technology shares. U.S. futures and European stocks move higher, while easing French bond-market stress and a pullback in Middle East risk help improve sentiment after two days of losses. Elsewhere, oil prices weaken as easing Middle East tensions reduce immediate supply concerns, while gold strengthens as investors return to the metal following its recent pullback. Bitcoin also moves higher alongside the broader improvement in risk sentiment. Today’s economic calendar includes the Canadian Unemployment Rate and U.S. preliminary University of Michigan Consumer Sentiment, alongside speeches from ECB officials Cipollone and Schnabel and the Fed’s Collins.
News Headlines. SoftBank seeks $100bn from Gulf investors to expand AI bet. US 10-year Treasury yields risk hitting 6% for the first time since 2000, Pimco says. Famous Italian winery loses 30,000 bottles worth Euro 5 million in heist. Delta Airlines cuts 2026 forecast on fuel surge, but CEO says demand is still strong. Residents board up windows and National Guard troops deploy as hurricane Isaias nears US Gulf Coast. Oil eases, bringing some respite to stocks and battered bonds. Arrests and detentions of Canadians spike in the US and travel registrations surge, too. Oil retreats as Trump rules out attacks on Iran before Midterms.\
In currency markets. Against the USD, JPY remains under pressure as U.S. Treasury yields push higher again and softer Japanese household spending adds to doubts over how quickly the BoJ can tighten policy. AUD outperforms on firmer risk sentiment and support from a still-restrictive RBA outlook, while ZAR strengthens alongside firmer precious metals and improved global risk appetite.
In commentary markets. WTI -0.96% | Nat Gas -1.42% | Gold +1.21% | Silver +1.84% | Copper +1.50% | Palladium +2.76% | Coffee -0.42% | Cocoa -0.69% | Soybeans +0.49% | Wheat +0.07%
CAD is unchanged in early trading after finding some support from a narrowing U.S.-Canada two-year yield spread, which has eased from the historically wide levels seen earlier in the week. Softer oil prices are limiting the rebound, while the broader backdrop remains challenging as policy divergence between the Fed and BoC is still expected to favour the USD. Attention now turns to today’s Canadian employment report, with markets looking for fresh direction on the domestic economy and future BoC policy.
EURCAD is broadly steady in early trading, with the euro finding some support as French bond yields ease and immediate fiscal concerns stabilise. Softer oil prices are limiting support for CAD, leaving the cross largely range-bound, while France’s fiscal outlook and today’s Canadian employment report remain the main near-term risks.
EUR is broadly flat against the USD, with lower U.S. yields and some easing in geopolitical tensions offering support, but persistent concerns over France’s fiscal position and political gridlock continue to keep a risk premium embedded in the single currency. Yesterday’s ECB meeting account also showed policymakers remain focused on elevated energy prices, sticky inflation and higher long-term yields, reinforcing expectations that policy will stay restrictive even as the growth outlook remains uneven. Attention today turns to Michigan Consumer Sentiment and inflation expectations in the U.S., alongside remarks from Lagarde, Cipollone and Schnabel for any fresh guidance on the ECB’s policy stance.
GBPEUR edges higher and remains close to recent 16-month highs, with GBP continuing to benefit from expectations for further BoE tightening while the euro remains burdened by France’s fiscal and political uncertainty. Bailey’s warning that inflation risks remain elevated has reinforced expectations for a November BoE hike, while high oil prices and lingering French bond-market stress continue to limit the euro’s recovery.
GBP edges higher against the USD as softer Fed rhetoric weighs modestly on the greenback, with Waller signalling that further rate hikes need not come at consecutive meetings. Gains remain capped by renewed UK fiscal concerns ahead of the October 28 Budget, after long-term borrowing costs recently climbed to their highest levels since the 1990s, while today’s Michigan Consumer Sentiment report provides the next U.S. catalyst.
Payment Services are provided by Equals Connect Limited, registered in England and Wales (registered no. 07131446). Registered Office: Vintners’ Place, 68 Upper Thames St, London, EC4V 3BJ. Equals Connect Limited is authorised by the Financial Conduct Authority to provide payment services (FRN: 671508).
