The Morning Update

The USD holds steady, oil prices gain, while equity and US yields markets are mixed ahead of the key US inflation report. The U.S. dollar holds broadly steady after easing from recent 18-month highs, with investors reluctant to take fresh positions ahead of today’s U.S. CPI report and further Fed commentary. Recent remarks from Williams and Waller have been interpreted as less hawkish, while slightly lower Treasury yields have also taken some support away from the greenback. Global equity markets are mixed, with Asian shares lower while U.S. and European markets trade modestly higher ahead of today’s U.S. CPI report and another busy round of corporate earnings. Weakness in chipmakers continues to weigh on sentiment, but resilient bank results and selective strength in European technology stocks are helping support broader markets. Elsewhere, oil prices edge higher after the IEA warned that global diesel markets are likely to remain tight well into 2027, with Middle East and Russian supply disruptions continuing to constrain inventories despite weaker demand. Gold and Bitcoin ease modestly as investors stay cautious ahead of today’s U.S. CPI report. Today’s economic calendar includes U.S. CPI and Core CPI inflation, Canadian Building Permits and the Fed’s Beige Book, alongside speeches from ECB President Lagarde, BoE’s Bailey and Pill, BoC Governor Macklem and Fed officials Bowman and Barkin.

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News Headlines. Oil rises after the IEA warns market constraints could linger, Saudi Aramco facilities attacked. Bessent's growth plans aren't enough to tame surging deficit and debt pile, IMF chief says. The latest US inflation is expected to show price increases are accelerating. AI demand will exceed supply for 2 more years, says ASML. China's exports surge 36% as AI-related shipments boom. India's Modi to visit Canada in December, Carney's office says. Tuesday saw Canada's stocks rise as energy stocks gain. Zelensky says Kyiv's partners failed to warn of ballistic missile attack.

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In currency markets. Against the USD, currency markets are mostly sidelined ahead of today’s U.S. CPI report, while AUD and NOK outperform their peers. AUD is supported by the RBA’s recent rate hike and hawkish meeting minutes, while NOK benefits from elevated energy prices and a relatively firm domestic rate backdrop.

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In commodity markets. WTI +1.22% | Nat Gas +0.43% | Gold -0.29% | Silver -1.33% | Copper +0.10% | Palladium +0.67% | Coffee +0.82% | Cocoa +3.00% | Soybeans +0.55% | Wheat -0.49%

CAD holds Tuesday’s gains after rebounding from 18-month lows, helped primarily by a retreat in the USD and lower U.S. Treasury yields, while easing geopolitical concerns also improved the broader risk backdrop. Support remains fragile, however, with softer oil prices and last week’s sharp deterioration in Canadian employment continuing to limit expectations for further BoC tightening. Focus today is on Governor Macklem’s appearance at the IMF meetings and, more importantly, U.S. CPI, which could materially shift Fed expectations and the U.S.-Canada rate differential.

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EURCAD eases in early trading, extending its recent pullback as CAD holds Tuesday’s rebound while the euro remains constrained by ongoing French fiscal concerns and elevated energy costs. The cross has slipped toward the lower end of its recent range, with today’s focus on BoC Governor Macklem and U.S. CPI; any further narrowing in U.S.-Canada rate expectations could provide additional support for the loonie.

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EUR holds steady against the USD, with the single currency struggling to build on its rebound from 17-month lows as concerns over France’s fiscal outlook and elevated energy costs continue to weigh on sentiment. Lagarde has reiterated that France’s debt problems require domestic fiscal consolidation rather than ECB intervention, while attention now turns to U.S. CPI and Bowman’s remarks at the IMF meetings for the next signal on the relative policy outlook.

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GBPEUR holds recent gains near 16-month highs, with GBP supported by renewed UK fiscal-discipline signals while the euro remains weighed by France’s debt concerns and high energy costs. UK Chancellor Healey has indicated that new Budget measures will be funded through taxes or spending restraint rather than additional borrowing, while Lagarde’s rejection of ECB intervention in French bonds has kept pressure on the euro side of the cross.

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GBP is broadly unchanged against the USD, with support from reports that Chancellor Healey plans to fund new Budget measures through higher taxes or spending restraint rather than additional borrowing, helping ease concerns over the UK’s fiscal position. The pound’s upside remains limited, however, as markets stay cautious ahead of today’s U.S. CPI report and further Fed commentary, both of which could materially shift expectations for the dollar and relative rate outlook.