The USD holds steady, oil prices ease, while global equity markets and US yields are mixed amid unfolding Russian sanctions. The U.S. dollar remains under pressure after posting its first weekly decline in more than a month, as markets continue to scale back expectations for an October Fed hike despite still-elevated inflation. Treasury yields remain near four-week lows, while renewed U.S. sanctions pressure on Russia is adding another geopolitical layer through energy markets and broader risk sentiment. Global equity markets are broadly lower as renewed concerns over the sustainability and financing of the AI investment boom continue to weigh on sentiment. European shares are under pressure amid fresh political unrest and bond-market weakness in France, while recent volatility in chipmakers and a heavy earnings calendar keep investors cautious despite a modest rebound in U.S. futures. Elsewhere, oil prices ease after the U.S. temporarily waived key sanctions and tariffs on Russia, raising expectations for increased Russian fuel exports. Gold prices firm as lower oil prices and softer yields revive safe-haven demand, while Bitcoin rallies as the easing energy backdrop provides some relief to risk-sensitive assets. Today’s economic calendar includes Canadian CPI inflation, including the BoC’s core inflation measures, the Bank of Canada’s Business Outlook Survey and the U.S. NAHB Housing Market Index, with Canadian inflation the primary focus.
News headlines. Putin reportedly proposes three-way summit with Trump and Xi on Ukraine war - without Zelensky. French unrest compounds debt crisis fears - Paris-listed stocks, bonds and the euro fall. Treasury yields move lower as investors assess US inflation backdrop. Alberta's separatists appear set for defeat, but vow to fight on. Zelensky says trump is pushing Ukraine, not Putin, to yield. China's economy picks up pace with 4.5% growth. US threatens European companies over Starlink restrictions. Anthropic commits 5% shares to 'public benefit' fund. Four dead and dozens injured in fire at Alberta military base. French government in crisis mode after a weekend of riots.
In currency markets. Against the USD, currency markets come under renewed selling pressure, with AUD the biggest loser as weaker Australian employment data weighs on RBA tightening expectations and broader risk sentiment remains cautious. Attention now turns to tonight’s China interest-rate decision, an important near-term catalyst for AUD given Australia’s close trade exposure to China.
In commodity markets. WTI -0.20% | Nat Gas +0.83% | Gold +0.21% | Silver +0.71% | Copper +0.19% | Palladium +1.20% | Coffee +1.18% | Cocoa +0.39% | Soybeans Flat | Wheat +0.38%
CAD continues to advance, strengthening by roughly 1% over the past week against the USD as the greenback retreats and some of the heavy bearish positioning around the loonie is unwound. Today’s focus is firmly on Canadian inflation, with headline CPI expected to accelerate to around 3.2% from 3.0%, alongside the BoC Business Outlook Survey; firmer underlying inflation would reinforce the case for the Bank to remain cautious about easing despite recent weakness in employment. Alberta also votes today on its non-binding separation question, although recent polling shows roughly seven in ten Albertans favour remaining in Canada, limiting the immediate market risk unless the result is unexpectedly close.
EURCAD continues to ease testing 1.5800, with CAD strengthening by roughly 0.7% against the euro over the past week. The move reflects both a firmer loonie and renewed euro weakness, with political unrest and fiscal concerns in France continuing to weigh on the single currency. On the Canadian side, today’s CPI report and BoC Business Outlook Survey are the key catalysts, while weaker oil prices are limiting the extent of CAD’s advance.
EUR remains under pressure against the USD as escalating fiscal and political risks in France weigh on the single currency, with the French-German 10-year yield spread widening to its highest since the euro-area debt crisis. Violent unrest and continued difficulty passing a deficit-reducing budget are adding to concerns, while persistent Middle East tensions and expectations for at least one further Fed hike this year are supporting the USD.
GBPEUR advances toward 1.1900 and fresh 16-month highs as GBP remains supported by expectations for further BoE tightening, while the euro comes under renewed pressure from France’s fiscal and political instability. Markets are pricing roughly 100 basis points of BoE tightening over the next year, while widening French-German bond spreads and violent protests in France continue to undermine confidence in the single currency.
GBP edges higher against the USD, supported by expectations that the BoE could raise rates in November and by the recent pullback in U.S. Treasury yields, although gains remain modest as markets await a heavy UK data week. Attention turns to Tuesday’s labour-market report, where unemployment is expected to edge higher, followed by Wednesday’s CPI release, with headline inflation forecast to accelerate to around 3.4%. These releases will be critical in determining whether current BoE tightening expectations remain justified and could set the direction for GBP through the rest of the week.
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