The Morning Update

The USD holds steady, oil prices advance, equity markets fall, and US yields rise amid midterm and Middle East risks.The U.S. dollar eases modestly as investors remain cautious ahead of today’s midterm elections and monitor renewed uncertainty around U.S.-Iran negotiations. Lower oil prices have also reduced some safe-haven demand for the greenback, while the prospect of a more divided Congress is adding to concerns over the U.S. fiscal and growth outlook. Global equity markets are broadly lower as investors remain cautious ahead of the U.S. midterm elections, with European and Asian shares under pressure while U.S. futures are mixed. Weakness in AI-linked stocks continues to weigh on sentiment, with investors increasingly focused on whether heavy technology spending can translate into stronger returns. Elsewhere, oil prices gain after U.S. strikes on Iran’s Qeshm Island revive concerns over further Middle East supply disruptions, while gold weakens as safe-haven demand remains subdued. Bitcoin is broadly steady as investors remain cautious ahead of the U.S. midterm results. Today’s economic calendar includes U.S. JOLTS Job Openings and Factory Orders, alongside a speech from BoC Governor Macklem, with updates from the U.S. midterm elections expected throughout the evening.

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News Headlines. Oil prices climb after US strikes Iran's Qeshm Island. Apple shares slide after weak margin outlook; Palantir slumps 8% after earnings. Treasury yields rise ahead of midterm vote, jobs data and Iran tensions. US voters prepare to deliver verdict on Trump. Brussels sets tight deadline for ECB president nominations. Italy's 'exit tax' plan spooks rich expats. Sweden is set for first rate increase since 2023. Business groups press Carney to relax Canada's immigration curbs. TSX futures slip as oil prices rebound, and US midterms in focus.

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In currency markets. Against the USD, CHF steadies after Swiss inflation accelerated to its highest in nearly three years, while CNY weakens sharply after China raised banks’ foreign-currency reserve requirements to curb recent yuan strength. AUD also underperforms despite the RBA’s 25bp hike, as a split 6–3 vote and softer forward guidance reduced expectations for further tightening.

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In commodity markets. WTI +2.04% | Nat Gas +1.44% | Gold -1.39% | Silver -3.74% | Copper -3.15% | Palladium -2.99% | Coffee +0.91% | Cocoa -0.26% | Soybeans +0.27% | Wheat +0.04%

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CAD advances toward recent six-week highs as firmer oil prices and a still-narrower Canada-U.S. yield spread continue to support the loonie, while constructive trade comments from Ottawa and Washington remain a positive backdrop. Attention today turns to BoC Governor Tiff Macklem and Senior Deputy Governor Carolyn Rogers before the House Finance Committee, where markets will look for any indication that last week’s 25bp hike could be followed by further tightening if inflation pressures persist. With U.S. midterm voting underway, broader FX volatility may remain contained until the political picture becomes clearer.

EURCAD eases back toward the 1.56 area as CAD benefits from firmer oil prices, a narrower Canada-U.S. yield spread and ongoing expectations that the BoC may tighten further after last week’s rate hike. The euro remains comparatively subdued, with French fiscal concerns and softer regional growth limiting upside, leaving the cross vulnerable to another test of recent lows.

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EUR slips modestly in early trading, with investors reluctant to add exposure ahead of the U.S. midterm elections and today’s JOLTS data. The euro still has some support from the ECB’s relatively hawkish stance after Lagarde confirmed that a December hike remains possible, but French fiscal concerns and softer regional growth continue to cap the upside. Wednesday’s preliminary Eurozone inflation report is the next major domestic catalyst and could materially shift expectations for another ECB move before year-end.

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GBPEUR edges higher, holding near 17-month highs as expectations for a 25bp BoE hike on Thursday continue to support GBP. The euro remains constrained by lingering French fiscal risk despite recent stabilization in bond markets, while today’s ECB speakers and Wednesday’s Eurozone inflation data could shape expectations for another ECB hike before year-end.

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GBP is flat in early trading as investors remain cautious ahead of today’s U.S. midterm elections and Thursday’s BoE decision. The BoE is widely expected to raise rates by 25bp to 4.0%, supported by firmer UK inflation and activity, although the vote split and Bailey’s guidance on further tightening will be key. Today’s U.S. JOLTS data, followed by ADP on Wednesday and payrolls on Friday, add further event risk for the pound.