The Morning Update

The USD is steady, oil prices ease, equity markets are down, and US yields are mixed following the Trump-Xi meeting. The U.S. dollar held steady after the Trump–Xi meeting concluded, with markets interpreting the outcome as a one-year trade truce between the U.S. and China. While the agreement eased immediate trade tensions and curbed safe-haven demand, the greenback remained supported by expectations that the Federal Reserve will take a measured approach to future rate cuts. Overall, the dollar traded in a narrow range as investors assessed the limited but stabilizing impact of the truce on global risk sentiment. Global equities held near record highs after the Trump–Xi meeting concluded with a one-year trade truce, easing tensions but leaving uncertainty over the longer-term outlook. U.S. stock futures were little changed, while Asian markets slipped from recent highs as investors viewed the outcome as a tactical pause rather than a breakthrough deal. European equities traded slightly lower, with sentiment tempered by cautious central bank signals and mixed corporate earnings. Despite the limited scope of the truce, optimism around artificial intelligence and ongoing Federal Reserve policy easing continued to underpin global risk appetite. Elsewhere, oil prices declined on renewed supply concerns and easing geopolitical risk, while gold fell as a stronger U.S. dollar dampened safe-haven demand. Bitcoin also retreated, pressured by weak momentum and investor caution amid a softer macro backdrop. Investors will be focused on the EBC interest rate decision, the German inflation report, and speeches from Bowman and Logan will help direct currency markets today.

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In the news. The US and China agree on a 1-year trade truce after Trump-Xi talks. The Netherlands swings to the centre after a far-right setback. Trump says South Korea can build nuclear-powered submarines in the US. The Fed trims US rates by a quarter point but casts doubt on December cut. Eurozone economy expands 0.2% in the third quarter. Stocks fall amid trade, tech, and Fed crosswinds. Global carmakers brace for production cuts due to the chip shortage. Hurricane Melissa wreaks $8 billion in damage, killing dozens. Canada to shrink civil service, Champagne says ahead of the Budget. Trump orders nuclear weapons trials after Russia tests.

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In currency markets. The Japanese yen weakened sharply after the Bank of Japan kept rates unchanged and offered no clear guidance on future hikes, slipping to an 8½-month low near 153.90 per dollar as investors viewed the decision as overly cautious. In contrast, the Australian dollar inched higher, supported by resilient domestic data and steady risk sentiment following the Trump–Xi trade truce. Meanwhile, the Swiss franc firmed slightly against the U.S. dollar, reflecting continued demand for safe-haven assets amid lingering global uncertainty. CNY slipped 0.2%, while Asian currencies are down 0.1% on average against the USD. Trading currencies are mixed, with JPY tumbling 0.75%, ZAR weakening 0.45%, NOK falling 0.25%, PLN, SEK, AUD, & CZK are flat, CHF, KWD, DKK, & NZD up 0.1% against the USD.

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In commodity markets. OIl prices fell 0.7%. Natural Gas & Silver prices are flat. Gold prices up 0.2%. Copper prices weakened 1.1%. Coffee prices eased 0.35%, while Soybean and Wheat prices tumbled 1.85%.

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CAD is steady in early trading, straddling 1.3950 after pulling back from a four-week high in the wake of the Federal Reserve’s policy decision. The Bank of Canada cut its benchmark rate by 25 basis points to 2.25%, signalling what could be the end of its current easing cycle while keeping the door open for further action if the outlook worsens. Governor Tiff Macklem noted that the move aims to support an economy adjusting to the impact of U.S. tariffs, even as inflation remains near the 2% target. The Fed’s more cautious tone, with Chair Jerome Powell suggesting another U.S. rate cut in December is not guaranteed, provided some support for the greenback. Overall, the loonie remains range-bound as traders weigh diverging central bank signals and shifting expectations for growth and policy on both sides of the border.

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EURCAD firmed in early trading ahead of the European Central Bank’s rate decision, supported by a mild uptick in risk sentiment. Despite modest Eurozone GDP growth of 0.2%, traders positioned for a cautious but steady message from the ECB rather than fresh easing signals. The Canadian dollar remained subdued after the Bank of Canada’s rate cut, keeping EUR/CAD slightly bid in the near term.

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EUR edged higher in early trading, with EUR/USD holding above 1.1600 as investors looked ahead to the European Central Bank’s policy decision later today. The move followed a modestly better-than-expected Eurozone GDP reading of 0.2% for the third quarter, which helped temper recent pessimism about the region’s growth outlook. Traders are also watching the upcoming German inflation report, which could provide fresh clues on whether price pressures are stabilizing or beginning to ease. The ECB is widely expected to keep interest rates unchanged but may strike a cautious tone as policymakers balance weak growth with persistent inflation risks. Overall, the euro remains supported by a softer U.S. dollar and hopes that the ECB will signal policy stability rather than further easing in the near term.

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GBPEUR weakened in early trading, as mounting concerns over the UK’s fiscal outlook and expectations of policy easing from the Bank of England continue to weigh on sterling. At the same time, the euro is gaining modest support from signs of relatively firmer economic data in the eurozone and expectations that the European Central Bank may maintain a more cautious easing path. As a result, the GBP/EUR is trading lower amid this divergence in policy outlooks between the UK and the eurozone.

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GBP slipped below 1.3200 against the U.S. dollar as signs of improving U.S.–China trade relations boosted demand for the greenback. Optimism following President Trump’s meeting with President Xi—where both sides agreed to ease tariffs and resume key exports—supported a rebound in the U.S. dollar index around 99.20. Meanwhile, the Federal Reserve’s cautious stance after Wednesday’s rate cut dampened expectations for further policy easing this year, adding to the dollar’s strength and keeping the pound under pressure.