The USD softens, oil prices rally, equity markets fall, and US yields are mixed amid a tech selloff and Middle East concerns. The U.S. dollar softens modestly as AI-spending concerns drive demand into Treasuries and investors trim long-USD positions ahead of Tuesday’s midterm elections. Strong U.S. growth and still-firm inflation are limiting the downside, however, by keeping expectations for further Fed tightening later this year firmly in play. Global equity markets are broadly lower as disappointing earnings from Amazon, Intel and other technology names deepen concerns over the scale and financing of AI investment. U.S. futures and European shares are under pressure, with investors rotating toward bonds and defensive assets, while higher oil prices and renewed Middle East tensions add to the cautious tone. Elsewhere, oil prices ease as renewed diplomatic efforts with Iran offset lingering Middle East supply risks, while gold slips modestly. Bitcoin tumbles after Binance disclosed a security incident with an estimated $6.3 billion impact, temporarily suspending withdrawals while roughly $3 billion of affected assets have been frozen so far. Today’s economic calendar includes Canadian GDP, U.S. Employment Cost Index and Chicago PMI, alongside speeches from the ECB’s Lane and Fed officials Daly and Musalem.
News Headlines. Chevron beats earnings expectations as refining profits soar on high diesel fuel prices. Amazon falls 7%, Intel plunges 25% in premarket trading, as pressure mounts after earnings. The Eurozone economy slows to 0.4% growth in Q3 as crisis-hit France contracts. Wall Street braces for Democratic gains as the 2026 midterm election nears. Biggest-ever crypto hack impacts $6.3 billion as Binance works to contain fallout. Iran claims four tankers hit mines in Hormuz as US strike fear grows. UK wins back bond investors with a dose of fiscal restraint. An air link between oil capitals underscores Canada's Gulf pivot. Trump says Canada has been treating the US very nicely. Air Canada cuts some capacity in the first quarter on higher fuel costs.
In currency markets. Against the USD, JPY outperforms after the BoJ kept rates unchanged but raised its inflation forecast and reinforced expectations for further tightening, while the yen also benefits from renewed safe-haven demand amid AI-driven equity weakness. NOK is firmer on support from still-elevated oil prices, while ZAR underperforms as broader risk aversion and weaker commodity-sensitive sentiment weigh on the rand.
In commodity markets. WTI +2.07% | Nat Gas -1.59% | Gold -0.96% | Silver -3.30% | Copper -1.31% | Palladium -2.89% | Coffee +0.28% | Cocoa -1.12% | Soybeans -0.16% | Wheat +0.41%
CAD extends gains to six-week highs as the BoC’s return to tightening narrows the Canada-U.S. yield gap and strengthens the loonie’s rate backdrop. Elevated oil prices and a softer USD are adding support, while limited progress in Canada-U.S. talks on easing steel and auto tariffs remains a lingering source of uncertainty. Attention today turns to Canada’s GDP report, with August growth expected to improve to 0.2% from 0.0% in July, reinforcing the view that the economy is regaining some momentum.
EURCAD is broadly steady in early trading, with the euro still on the back foot as elevated oil prices worsen the region’s energy-import burden and French fiscal concerns continue to weigh on sentiment. Uncertainty around the ECB’s future leadership after Christine Lagarde confirmed she will leave in February 2027 adds another layer of caution, while CAD remains supported by the BoC’s renewed tightening cycle continues to support the loonie.
EUR firms modestly against the USD after the ECB delivered a hawkish hold, leaving rates at 2.50% while warning that elevated energy prices pose upside risks to inflation. Markets now see a meaningful chance of another 25bp hike in December, although Lagarde stressed a measured, data-dependent approach. Attention today turns to German and Eurozone Q3 GDP for the next signal on regional growth.
GBPEUR advances toward fresh 19-month highs as GBP remains supported by a relatively calm market reaction to the UK Budget and expectations for a BoE rate hike next week. The euro remains under pressure after the ECB’s cautious hold, with renewed French debt concerns, weaker French growth and uncertainty around the ECB leadership transition adding to the softer tone for the single currency.
GBP extends gains against the USD, testing six-week highs as the UK Budget calms fiscal concerns and expectations build for a 25bp BoE hike next week. UK gilt yields have eased since the Budget, while resilient domestic data and inflation still above target reinforce the case for tighter policy. A softer USD backdrop ahead of the U.S. midterm elections is adding further support.
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