The Morning Update

The USD eases, oil prices remain steady, equity markets are up, and US yields are mixed as optimism about the US shutdown improves sentiment. The U.S. dollar slipped in early trading as optimism grew that lawmakers were moving closer to resolving the prolonged government shutdown. Progress in the Senate toward passing a short-term funding bill lifted risk sentiment and reduced safe-haven demand for the greenback. However, traders remain cautious since the deal still requires House approval, and the delay in key economic data releases continues to cloud the Federal Reserve’s policy outlook. Global equity markets rallied sharply as optimism mounted over progress toward ending the U.S.’s longest government shutdown in history, driving a swing into risk assets and putting downward pressure on bonds. U.S. futures were up around 1% for the S&P 500 and 1.5% for the Nasdaq 100, as tech stocks such as Nvidia Corp. rebounded strongly following last week’s sharp decline. The improving sentiment spread into commodities and emerging markets, while Treasuries sold off slightly as the prospect of clearer U.S. economic data and potential policy shifts gained traction. Elsewhere, oil prices held steady as traders balanced supply risks with signs of softer demand, keeping Brent crude near recent ranges. Meanwhile, gold and Bitcoin rallied as investors sought alternative assets amid a cautious but improving global risk sentiment. Focus this week, Monday will be on BoE, ECB & Fed speakers. Tuesday, GBP Jobs report, German ZEW survey and ADP Employment Change. Wednesday, German CPI, BoC Summary of Deliberations, and a flurry of Fed speakers. Thursday, UK GDP & China Retail Sales. Friday EU GDP.

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In the news. Senators take first step to end US government shutdown. Italy's NATO defence spending pledge clashes with mounting debt. ECB to kick off race for top roles as Lagarde era enters final stretch. Global markets rise as US senators move to end shutdown. UK cyber insurance claims tripled in 2024, says trade body. China suspends some critical mineral export curbs to the US as trade truce takes hold. Warren Buffett to release farewell letter Monday as Berkshire Hathaway shows its stability for investors. Carney survives two confidence votes on the budget, quashing fears of a winter election.

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In currency markets. The South African rand and Australian dollar both strengthened as improved risk sentiment and a softer U.S. dollar encouraged demand for higher-yielding currencies. Meanwhile, the Japanese yen weakened against the US dollar as investors shifted away from safe-haven assets amid easing global uncertainty. CNY is flat, while Asian currencies slipped 0.2% on average against the USD. Trading currencies are mixed, with JPY weakening 0.5%, CHF, NOK & CZK fell 0.25%, KWD & DKK eased 0.1%, PLN flat, NOK firmed 0.2%, MXN & NZD gained 0.3%, and ZAR rallied 0.5% against the USD.

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In commodity markets. Gold up 0.1%. Natural Gas & Silver prices rallied 3.8%. Gold prices rallied 1.9%. Copper prices gained 1.65%. Coffee & Wheat prices up 1.1%, and Soybean prices firmed 0.5%.

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CAD is stronger in early Monday trading, buoyed by rising commodity prices and last Friday’s unexpectedly robust jobs report, which showed an addition of 66,600 jobs and a decline in the unemployment rate to 6.9%. Market participants are also revisiting the recent federal budget and the upcoming final parliamentary vote on November 17, which could influence fiscal policy and investor sentiment. With the Bank of Canada signal­ling a likely pause after its policy announcement, the loonie’s gains reflect expectations of a more balanced outlook for the Canadian economy.

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EURCAD holds steady in early trading, as the eurozone and Canadian dollar showed offsetting strengths that kept the cross in a narrow range. On one side, the euro benefited from its recent resilience and relatively stable outlook; on the other, the Canadian dollar found support from firmer commodity prices and improved domestic data. With neither side willing to commit to a clear breakout, traders appeared content to await fresh central-bank cues and policy news.

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EUR held steady in early trading as the pair clawed back above 1.1550 amid improving risk sentiment driven by hopes of a near-term U.S. government reopening. With the dollar losing safe-haven appeal, the euro found support even though remarks from European Central Bank officials offered little fresh impetus. Traders are now focused on upcoming data and statements as they weigh whether the euro can sustain the momentum.

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GBPEUR edged higher against the euro, but traders are likely to keep the pair sidelined as they await Tuesday’s key Eurozone and UK data releases. With major macro events looming, market participants appear content to hold positions rather than initiate new moves until clearer signals emerge.

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GBP held steady in early trading as markets awaited key UK labour market data and Thursday’s GDP release, both of which could influence Bank of England policy expectations. Investors remain cautious, given the looming economic indicators and ongoing uncertainty surrounding UK fiscal and growth prospects.