The USD edges higher, oil prices rally, equity markets are mixed, and US yields rise amid tech earnings and French bond concerns. The U.S. dollar edges higher but remains close to recent lows as investors balance reduced expectations for an October Fed hike against persistent geopolitical and inflation risks. Today’s focus is on the U.S. flash Manufacturing and Services PMIs for an early read on October activity, followed by University of Michigan sentiment and inflation expectations, which could be particularly important given the recent surge in oil prices. Global equity markets are mixed, with U.S. and European markets under pressure while Asian shares rebound as the recent technology selloff eases. Meta’s results have reinforced concerns over the scale and financing of AI investment despite stronger revenue, while weakness across semiconductor shares continues to weigh on sentiment. Rising oil prices and ongoing Middle East tensions are adding another layer of caution by keeping inflation risks elevated. Elsewhere, oil prices extend their rally as Middle East tensions keep supply risks elevated, while gold edges lower as safe-haven demand softens. Bitcoin firms as broader risk sentiment stabilizes following the recent technology-led selloff. Today’s economic calendar includes Canadian Retail Sales, U.S. preliminary S&P Global Manufacturing and Services PMIs, and the University of Michigan Consumer Sentiment and Inflation Expectations.
News headlines. Oil hits $114 for the first time since May as global stocks knocked by AI fears. Russia and Ukraine trade fresh strikes despite renewed peace talks push. Treasury yields rise as traders await more economic data ahead of Fed decision. Volvo cars shares plunge 27% amid China, US slump and fresh job cuts. Trump asked Musk to lift starlink, WSJ reports. Nasdaq tumbles while Treasuries soar as Meta rekindles AI spending fears. Carney announces trade and defence partnership with Turkey. France is getting its credit ratings reviewed by Moody's.
In currency markets. Against the USD, MXN, SEK and CHF are all modestly weaker as the greenback recovers some of its recent losses. MXN remains pressured by reduced carry appeal, a more dovish Banxico backdrop and renewed USMCA uncertainty, while SEK is weighed by softer European growth and limited scope for additional Riksbank tightening. CHF is also giving back part of its recent safe-haven rally as immediate risk aversion eases slightly, despite ongoing Middle East and AI-related concerns.
In commodity markets. WTI +1.64% | Nat Gas -1.65% | Gold -0.57% | Silver -2.10% | Copper +0.76% | Palladium -0.86% | Coffee -0.14% | Cocoa -0.45% | Soybeans +0.02% | Wheat +0.04%
CAD holds steady near one-month highs as narrowing Canada-U.S. rate differentials and stronger oil prices continue to support the loonie. Markets are now largely pricing a 25bp BoC hike next week, while crude has climbed to its highest since May on renewed Middle East supply concerns. Attention today turns to Canadian retail sales, with a stronger-than-expected rebound likely to reinforce expectations for further BoC tightening, although TSX futures are softer as higher oil prices revive broader inflation concerns.
EURCAD remains under selling pressure, extending its recent decline as firmer oil prices and expectations for a BoC rate hike next week continue to support CAD. The euro remains weighed by France’s fiscal and political concerns, while elevated energy costs complicate the ECB outlook ahead of next week’s meeting. Today’s Canadian retail sales are the next key catalyst, with a solid rebound likely to reinforce the relative rate advantage that has been pushing the cross lower.
EUR remains under pressure against the USD after softer Eurozone PMIs reinforced concerns over slowing regional growth, with the Composite PMI easing to 51.9 and French private-sector activity unexpectedly contracting. Ongoing French fiscal and political concerns are adding to the pressure, while the USD is recovering on renewed safe-haven demand and expectations that the Fed could still tighten again in December. Attention now shifts to next week’s Fed and ECB decisions, followed by U.S. GDP and PCE inflation data.
GBPEUR extends gains to a fresh 17-month high after stronger UK PMI data reinforced confidence in the domestic economy, with the Composite PMI rising to 53.1 and beating expectations. The move is also being supported by easing UK fiscal concerns, while the euro remains pressured by French political risk, elevated energy prices and softer regional activity. Weaker UK retail sales and consumer confidence temper the outlook, but for now the relative growth and policy backdrop continues to favour GBP over EUR.
GBP edges lower against the USD despite stronger-than-expected UK PMI data, with the Composite PMI rising to 53.1 and signaling the strongest growth since February. Earlier weakness in retail sales and a modest rebound in the USD are limiting the pound’s upside, although expectations for a November BoE hike remain firmly in place after recent upside surprises in inflation and wages. Attention now turns to today’s U.S. flash PMI data for the next directional catalyst.
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