The USD edges higher, oil prices slip, equity markets are mixed, and US yields rise amid muted risk sentiment. The USD edged higher, as markets continued to digest this week’s Fed rate hike and hawkish guidance. Expectations for another increase have firmed, with markets pricing roughly a 53% chance of an October move, while the yen weakened even after the Bank of Japan raised rates to 1.25%, reinforcing the dollar’s relative rate advantage. Global equity markets were mixed, with Asian shares and U.S. futures higher as technology stocks benefited from easing oil prices and renewed strength in semiconductors, while European markets retreated. Lower energy prices have improved sentiment after a volatile week, although elevated bond yields and uncertainty over the pace of further global rate hikes continue to limit risk appetite. Elsewhere, oil prices slipped for a third straight day as Middle East supply concerns continued to ease, while gold firmed on renewed defensive demand. Bitcoin rallied alongside stronger technology and crypto-linked shares as broader risk sentiment improved. Today sees a light economic calendar with just the US Industrial Production report to help provide direction to currency markets intraday.
News headlines. Yen sinks after the BoJ raises rates to highest level since 1995. The US approves $24.3 billion sale of F35 fighter jets to Saudi Arabia as Houthis escalate attacks. Oil prices fall for a third day on Saudi Arabia supply hopes; US crude briefly dips below $100. Warren Buffett stepping down as chairman of Berkshire Hathaway. China presses Iran to help rein in Houthis after Saudi appeal. Investors buy US stocks at fastest pace in three months, BofA says. US said to hold off on tariffs until after Xi-Trump summit. Canada and the EU face limits to relationships after symbolic EU overture to Carney. Shell-led LNG Canada could approve phase 2 expansion by early October.
In currency markets. Against the USD, JPY tumbled more than 1% after the Bank of Japan raised rates as expected but failed to deliver sufficiently hawkish guidance to satisfy markets. Investors focused on two dovish dissenters and Governor Ueda’s emphasis on moving cautiously, despite acknowledging upside inflation risks and the possibility of further hikes, leaving the yen under renewed pressure.
In commodity markets. WTI -0.58% | Nat Gas -1.34% | Gold +0.44% | Silver +2.18% | Copper -0.21% | Palladium +2.45% | Coffee +0.54% | Cocoa -5.02% | Soybeans -0.99% | Wheat -0.48%
CAD ends the week on the back foot near six-week lows, with widening U.S.-Canada interest-rate differentials continuing to favour the U.S. dollar after the Fed’s latest hike and signal of further tightening. Softer oil prices and the ongoing U.S.-Canada trade dispute continue to add to the pressure, while expectations that the Bank of Canada could also tighten policy in coming months are providing only limited support.
EURCAD edged higher in early trading towards 1.6100, but remains comfortably below last week’s peak around 1.6121. The cross has largely traded sideways in recent sessions, with softer CAD sentiment offset by a euro that remains constrained by cautious ECB expectations; a break above the 1.6100–1.6120 area would be needed to challenge the higher levels seen earlier this month.
EUR traded broadly flat, stabilizing below 1.1500 after touching a six-week low as investors digested recent hawkish moves from both the ECB and Federal Reserve. The ECB’s latest rate hike and expectations for further tightening are providing some support, although the Fed’s higher rate path and firmer U.S. yields continue to limit upside for the euro.
GBPEUR held broadly steady in early trading after yesterday’s decline, with stronger-than-expected UK retail sales helping the pound recover some ground following the Bank of England’s cautious hold. The cross remains near recent lows, however, as the ECB’s comparatively firmer policy stance continues to support the euro, leaving GBPEUR largely range-bound for now.
GBP edged higher, breaking through 1.3350 after stronger-than-expected UK retail sales rose 0.5% in August, offering some support after a difficult week for the pound. The Bank of England held rates at 3.75% in a 6–3 vote and acknowledged a tougher inflation outlook, but expectations for a relatively gradual tightening path continue to limit upside against a U.S. dollar supported by more hawkish Fed pricing.
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