The Morning Update

The USD firms, oil extends gains, equity markets rebound, and US yields are mixed ahead of the US Jobs report. The US dollar is edging higher and is on track to extend its winning streak into a fourth day as markets position ahead of today’s non-farm payrolls report. Expectations that the jobs data will be solid enough to keep the Fed on hold, combined with anticipation of a Supreme Court ruling that could curb President Trump’s tariff powers, have provided modest support to the greenback. With rate-cut expectations pushed further out and policy uncertainty still elevated, the USD remains firm against most major peers into the data. Global equity markets are strengthening as investors position cautiously ahead of Friday’s US jobs report, with rotation broadening beyond last year’s AI leaders into a wider set of sectors and regions. While US index futures have wavered, sentiment outside the US remains constructive, supported by expectations that growth can absorb higher yields if NFP data is balanced. Overall, equities appear to be consolidating rather than reversing, with investors still broadly aligned around the continuation of the bull market pending confirmation from key macro data. Elsewhere, Oil and gold prices have both been firm, with crude holding support amid ongoing macro and supply dynamics and precious metals maintaining strength as investors weigh risk factors. Meanwhile, Bitcoin remains under pressure around the $90,000 area, struggling to sustain gains as risk sentiment and macro drivers dominate crypto price action. In focus today, the Canadian Jobs report, US Average Hourly Earnings, US Nonfarm Payrolls and the Michigan Consumer Expectations Index, which will help drive currency market direction.

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In the news. Iran is cut off from the world as the Supreme Leader warns protesters. Hundreds of thousands without power as Storm Goretti hits France and Britain. Importers brace for $150 billion tariff refund fight if Trump loses at the Supreme Court. Russia says it fired its Oreshnik hypersonic missile at Ukraine. Rio Tinto is in talks to buy Glencore to form the world's biggest miner. Slower US job growth expected in December; unemployment rate likely dipped. GM to take $6 billion writedown on EV pullback. German exports fall unexpectedly, while industrial production rises.

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In currency markets. Against the US dollar, broader currency markets have weakened as the greenback holds near multi-week highs ahead of key US data. The Japanese yen remains under pressure as safe-haven demand fades, while the New Zealand dollar is also softer amid cautious risk sentiment and commodity-related headwinds. CNY is flat while Asian currencies fell 0.2% on average against the USD. Trading currencies remain under pressure, with JPY tumbling 0.5%, NZD & AUD weakening 0.3%, MXN, CZK & NOK easing 0.2%, CHF, KWD, DKK, ZAR & PLN down 0.1%, and SEK flat against the USD.

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In commodity markets. Oil, Gold and Soybean prices firmed by 0.4%. Natural Gas & Copper prices strengthened 1.7%. Silver prices rallied 3.5%. Coffee prices weakened 1.45%, and Wheat prices eased 0.4%.

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CAD eased in early trading and is hovering near a one-month low against the US dollar as investors trim risk-sensitive positions ahead of key labour market data. USD/CAD is holding below 1.3900, its weakest levels since early December, with markets focused on Friday’s Canadian employment report and the US non-farm payrolls release for direction on Bank of Canada and Federal Reserve policy. Yesterday, Canada posted a smaller-than-expected trade deficit of C$583 million in October, as imports outpaced exports, while the share of exports to the United States fell to a record non-pandemic low of 67.3%. The data highlight a clear shift toward trade diversification, with exports to non-US markets hitting a record high, driven by strong shipments of precious metals and oil.

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EURCAD is holding steady near recent highs as the euro remains supported by stable Eurozone inflation dynamics, while the Canadian dollar stays under pressure from fading risk appetite and ongoing trade uncertainty. Near-term direction will hinge on upcoming inflation and employment data, with CAD also sensitive to shifts in commodity prices.

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EUR remains under pressure near the 1.1650 area, trading close to one-month lows amid broad US dollar strength and a cautious market backdrop. Stronger-than-expected Eurozone retail sales have had little impact on the euro, with investors largely looking past regional data. Attention is firmly on the US Nonfarm Payrolls report, which is expected to show modest job growth and shape expectations for the Federal Reserve’s near-term policy path. Markets are also awaiting the US Supreme Court’s ruling on President Trump’s tariff powers, which adds an additional layer of event risk into the session.

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GBPEUR is holding near recent highs, with the pound remaining relatively firm as mixed economic signals from Germany continue to weigh on the euro. Weak export data and a narrowing German trade surplus have revived concerns about growth in the Eurozone’s largest economy, limiting euro demand. In contrast, the lack of major UK data releases has helped keep sterling stable, leaving the pair driven mainly by relative growth and inflation expectations on both sides.

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GBP remains on the back foot below 1.3450 as investors stay defensive ahead of the US nonfarm payrolls report and the Supreme Court ruling on tariffs, which is supporting demand for the dollar. With UK fundamentals offering limited near-term support and markets pricing further BoE easing, near-term direction hinges on whether US data reinforces expectations of a Fed pause or renewed rate cuts.