The Morning Update

The U.S. dollar softened, oil prices edged lower, equities posted modest gains, and bond yields ticked slightly higher amid cautious signals from the Federal Reserve. Market focus remains on upcoming U.S. economic data, including PMI and inflation figures, as well as speeches from Fed officials, which could shape expectations for future monetary policy.

‍

Yesterday, Fed officials offered contrasting views on the policy outlook: Governor Stephen Miran, nominated by President Donald Trump, called for additional rate cuts, while St. Louis Fed President Alberto Musalem, selected by the St. Louis Fed board and approved by the Board of Governors, cautioned that further easing could overheat inflation.

‍

News Headlines. France has officially recognized a Palestinian state, joining a growing number of countries supporting a two-state solution, with Macron calling for an end to the Gaza conflict. Several other nations, including Belgium, Luxembourg, and Malta, are set to follow, while the US and some G7 members stayed absent from a related France–Saudi summit. The U.S. may soon sanction the entire International Criminal Court, escalating its response to investigations of alleged Israeli war crimes, after previously targeting individual officials. Hong Kong braces for Super Typhoon Ragasa, prompting closures of schools, businesses, and flights, with life-threatening storm surges and flooding expected. Despite the Stock Exchange staying open, the storm is disrupting trade, logistics, and major events, including flight cancellations and potential IPO delays. Zelenskiy will seek allied support at the UN and in meetings with Trump, while Ukraine quietly prepares to rely more on itself amid fading hopes for new U.S. sanctions on Russia.

‍

In currency markets. The Indian rupee fell to a record low, pressured by a U.S. hike in H-1B visa fees that could slow the deployment of Indian IT workers and reduce foreign investment in the sector. Meanwhile, countries like South Korea are aiming to attract skilled scientists and engineers as the U.S. crackdown, including a $100,000 visa fee, disrupts the tech industry's reliance on talent from India and China. Asian currencies showed mixed movements, with the Chinese yuan up about 0.18% and the Thai baht rising slightly by 0.05%, while the Japanese yen slipped 0.15% against the U.S. dollar. The Malaysian ringgit also edged up around 0.12%, reflecting modest regional stability. Outside Asia, the South African rand strengthened roughly 0.20%, and the Mexican peso gained about 0.10%. Overall, these shifts reflect a dynamic global currency market shaped by economic trends and investor sentiment.

‍

In commodity markets. Energy prices saw mixed moves, with crude oil up around 0.55% and natural gas rising 0.07% on supply concerns. Gold and silver climbed 0.44% and 0.52%, respectively, hitting near-record levels. In agriculture, soybeans and wheat fell 0.43% and 0.34%, while lumber gained 0.18%. Overall, commodity markets were shaped by supply issues and investor sentiment.

‍

USD/CAD traded near 1.3840 as the Canadian dollar weakened on expectations of another Bank of Canada rate cut in October. Traders are closely watching a speech from Fed Chair Jerome Powell for signals on U.S. monetary policy. Looking ahead, upcoming Canadian GDP and employment data, along with U.S. inflation figures, are expected to guide the next moves in the pair.

EUR/CAD strengthened on Canadian dollar weakness and firmer Eurozone PMI data. Traders are watching Eurozone inflation along with Canadian GDP and employment figures for the next direction.

EUR/USD EUR/USD eased as mixed Eurozone PMI data highlighted weak momentum while Fed comments limited U.S. rate-cut bets. Traders now look to U.S. PMI data and Fed Chair Powell’s speech for direction.

GBP/EUR weakened as UK fiscal concerns and softer PMI data pressured the pound. Traders now await further UK and Eurozone PMI releases to gauge direction.

GBP/USD GBP/USD slipped as UK PMI data showed slower business growth. Traders now await U.S. PMI releases and Fed Chair Powell’s speech for further direction.

‍