The USD remains under pressure, oil prices weaken, equity markets rise, and US yields rise as risk-on sentiment improves. The U.S. dollar remains under pressure, extending its retreat from recent 18-month highs as Treasury yields ease and markets further reduce the odds of an October Fed hike. Fed Chair Warsh reiterated the need to restore price stability but declined to signal the next policy move, reinforcing expectations that the Fed is likely to pause later this month despite still-elevated inflation. Global equity markets are up, with U.S. futures and European shares advancing modestly as investors look to end a volatile week on firmer footing. Gains remain cautious, however, with chipmakers still under pressure after a sharp rotation away from AI-related stocks, while lower expectations for an October Fed hike and continued strength in Treasuries are helping support broader sentiment. Elsewhere, oil prices weaken as traders weigh a potential IEA supply release against continued Middle East risks. Gold firms, snapping a three-day decline as the softer USD and lower yields provide support, while Bitcoin eases as volatility remains elevated and investors stay cautious around risk assets. Today’s economic calendar includes Canadian Housing Starts, U.S. Empire State Manufacturing, Import Prices, Industrial Production and Capacity Utilization, alongside a speech from BoC’s Alexopoulos.
In currency markets. Against the USD, G10 currencies broadly strengthen as the greenback extends its retreat alongside lower U.S. Treasury yields and reduced expectations for an October Fed hike. Warsh offered no signal that the Fed is preparing to tighten again this month, reinforcing the view that policymakers are likely to pause despite still-elevated inflation and allowing most major currencies to recover further against the USD.
In commodity markets. WTI -0.72% | Nat Gas -1.39% | Gold +0.73% | Silver +1.29% | Copper +1.01% | Palladium +0.18% | Coffee +5.41% | Cocoa -0.41% | Soybeans -0.14% | Wheat -0.93%
News Headlines. Most Asian markets rise as calm returns after CoreWeave shock, and Indonesia faces market downgrade. The EU will probably have to give a new loan to Ukraine, Estonia PM Michal says. Bets on Fed rate hold in October strengthen after Warsh comments. Canadian home sales fall in September as mortgage rates increase, CREA says. Canada's farmers, crop quality assessors confront damage after wet harvest. TSX rose on Thursday, touches three-week high. Canada PM warns 'stakes are high' as Alberta vote nears. G7 economies plan simulated AI attacks on banks as cyber fears rise. EU vows to maintain Russian sanctions after US pivot. Investors dump data centre bonds as AI borrows face 'Darwin moment'.
CAD extends its gains against the greenback, despite weaker oil prices, as broad USD weakness and lower U.S. Treasury yields outweigh the commodity headwind. BoC Governor Macklem offered no fresh monetary-policy signal during his IMF appearance overnight, leaving markets focused on softer Canadian employment, the U.S.-Canada yield spread and expectations ahead of the October 28 BoC decision. The rebound remains fragile, however, with weaker domestic momentum and softer crude still limiting the loonie’s upside.
EURCAD edges higher in early trading as weaker oil prices weigh on the Canadian dollar, while the euro remains relatively stable despite lingering concerns over France’s fiscal outlook. Recent euro-area data have been mixed rather than decisively negative, allowing the single currency to hold its ground, while softer Canadian momentum and reduced support from crude are proving the more immediate drivers of the cross. Attention remains on further ECB commentary, with France’s elevated borrowing costs still a key constraint on any stronger EUR recovery.
EUR holds modest gains against the USD and is on track for its first weekly advance in more than a month, helped primarily by lower U.S. yields and softer Fed rhetoric rather than a material improvement in the euro-area backdrop. Final September HICP remains the key European focus after the preliminary reading showed inflation accelerating sharply, reinforcing the ECB’s concern that energy costs are keeping price pressures elevated, while France’s fiscal problems continue to limit upside for the single currency. Fed Chair Warsh’s refusal to signal an imminent move has also taken some support away from the USD, leaving EUR/USD firmer but still vulnerable to renewed U.S. rate pressure.
GBPEUR edges higher, extending its recent strength as better-than-expected UK GDP and industrial production continue to support GBP, while weaker euro-area industrial output and lingering French fiscal concerns weigh on the euro. The cross remains close to 16-month highs, although gains are being tempered by Bailey’s more measured tone on further BoE tightening and today’s euro-area inflation data.
GBP extends gains against the USD, reaching a fresh monthly high as the greenback retreats on expectations that the Fed will leave rates unchanged later this month and as U.S. Treasury yields pull back. GBP is also supported by stronger-than-expected UK GDP and hawkish comments from BoE Governor Bailey, reinforcing expectations that UK policy will remain relatively restrictive. The recent break above key technical resistance has added momentum to the move, although the broader outlook will still depend on whether incoming UK data can sustain the case for further BoE tightening.
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