The Morning Update

The USD dips, oil prices slip, equity markets are mixed, and US yields rise as investors reduce risk. The U.S. dollar eases as traders look ahead to a series of Federal Reserve speeches this week for guidance on the policy outlook. Investors expect Powell and other officials to stress a cautious, data-dependent approach rather than hint at aggressive rate cuts. Global equities were mixed, with MSCI’s world index flat as investors dialled back risk at the start of a relatively quiet week on the events calendar. India’s benchmark slipped 0.2% on U.S. visa fee plans that pressured its tech sector, while Chinese shares edged higher on reports of progress in a TikTok deal. U.S. stock futures retreated from record highs, European markets held steady, and Asian equities rebounded as concerns over the Bank of Japan’s potential ETF offloading eased. “This week is overall the calmest week of the month on the macro front, and with the earnings season over, markets will likely drift on hearsay and sentiment,” said Panmure Liberum strategist Joachim Klement. “Investors are increasingly bullish on the six-month outlook for US stock markets as the Fed has restarted its cuts, but we think this is a case of collective overconfidence.” Elsewhere, Oil prices slipped as supply concerns and weaker demand outweighed support from Fed rate cut expectations. Gold pushed toward fresh highs on safe-haven demand, while Bitcoin weakened below $112,500 as traders trimmed risk and long positions. In focus today, EU Consumer Confidence, and speeches from Fed's Williams, Musalem, Barkin, Hammack, Miran, BoE's Governor Bailey, and ECB's Lane will help drive the currency market directly.

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In the news. Big Tech companies and foreign companies scramble after Trump slaps $100,000 fee on H-1B visas. Schumer presses Trump to negotiate with Democrats as government shutdown deadline nears. Indian IT shares fall over fears from Trump's $100,000 H-1B visa fee. Israeli ministers call for West Bank annexation after recognition push. Pfizer closes in on $7.3bn takeover of anti-obesity drugmaker Metsera. European sugar groups suffer as low prices and soaring costs bite. World summit to meet on two-state solution as support grows for Palestinian state. Canada, among the four major Western nations, recognizes the Palestinian state, to the fury of Israel.

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In currency markets. The USD edged lower as easing risk sentiment boosted demand for the GBP and EUR, while commodity-linked currencies, including the MXN and CAD, came under pressure and lagged their G10 peers. CNY and Asian currencies are flat on average against the USD. Trading currencies are mixed, with MXN weakening 0.35%, KWD, JPY & NOK flat, NZD, SEK and CHF up 0.15%, AUD & CZK firmed 0.25%, DKK, ZAR and PLN strengthened by 0.3% against the USD.

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In commodity markets. Oil prices eased 0.25%. Natural Gas& Copper prices up 0.3%. Gold prices strengthened by 1.45%. Silver Prices rallied 2.5%. Wheat and Soybean prices weakened by 0.5%.

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CAD came under early selling pressure, ranking among the weaker G20 currencies as risk sentiment softened. Persistent trade concerns and softer oil prices kept the loonie under strain, while investors shifted toward the euro and pound. After last week’s Bank of Canada rate cut and its signal of openness to further easing if risks increase, markets are now looking to Governor Macklem’s speech on Tuesday and Friday’s GDP release for guidance on the outlook. Near-term direction will also be shaped by today’s Canadian Industrial Product Price and Raw Material Price Index releases, alongside a series of U.S. Fed speakers.

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EURCAD strengthened in early trading, supported by expectations of steady ECB policy, while the loonie remained under pressure from softer oil prices and ongoing trade concerns. With the Bank of Canada having cut rates last week and signalling openness to further easing, markets see EUR/CAD tilted higher as they await fresh guidance from both central banks.

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EURUSD extended its recovery, climbing toward 1.1800 after rebounding from last week’s lows, as investors snapped a three-day losing streak. Attention is firmly on central bank speakers, with more than ten Fed officials scheduled this week, including Chair Jerome Powell on Tuesday, who may signal how cautious the Fed will be following its recent rate cut. In Europe, comments from ECB policymakers and upcoming PMI data will offer further insight into the region’s outlook. Later in the week, Friday’s release of the U.S. Core PCE Price Index will be the key event for markets, potentially shaping expectations for Fed policy and the dollar’s next move.

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GBPEUR traded flat in early dealings as investors awaited fresh direction from central bank speakers. This week, remarks from BoE Governor Andrew Bailey and other policymakers, alongside ECB President Lagarde and colleagues, will be closely watched for signals on inflation, growth, and the pace of future policy moves.

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GBP edged higher against the U.S. Dollar, snapping a three-day losing streak as markets turned their focus to upcoming economic data. Preliminary UK and U.S. PMI figures due Tuesday are expected to provide key signals on growth momentum, with the UK Services PMI forecast to ease slightly and the U.S. Composite PMI seen holding steady. These releases come as investors seek clarity on how resilient each economy is heading into the final quarter of the year. Central bank commentary will also be crucial, with BoE Governor Andrew Bailey scheduled to speak on Monday and Fed Chair Jerome Powell addressing the economic outlook on Tuesday. Their remarks, along with speeches from other policymakers, are expected to guide sentiment on the future path of interest rates for both currencies.