The Morning Update

Quiet start to the day with the USD flat, oil and equities hedging higher, and treasury yield mixed. The Greenback is heading to its fourth weekly gain helped by the expectations of fewer rate cuts by the Fed in the coming month and by growing market bets of a possible Trump win. On the economic data side, US durable goods and the Michigan Consumer Sentiment Index is set to be released this morning.

In other news. The Middle Est conflict shows no sign of letting up as Israel confirms the killing of an Hamas commander posing as a UN aid worker, 17 people killed at a school in central Gaza and 3 journalists killed in an Israeli strike in Lebanon. European diplomats fear that a Trump win could lead to softer sanctions against Russia.

In currency markets. The CNY is heading for another weekly decline as market participants are concerned of a possible trade war should Trump be elected. South African reforms could push the ZAR higher, central bank chief says.

In commodity markets. Oil prices heads for another weekly gain as Middle East conflict keep market on edge. Gold and silver moved a little lower this morning but still managed to hold on to their weekly gains. Wheat ticked up, with traders continuing to monitor the potential impact on Black Sea trade of Russian efforts to regulate exports. Soybeans set for first weekly gain in a month on booming exports.

Current level USD Index                           104.152             Down 0.27%

The USD/CAD remains under pressure as market expect another 50-bps cut at the December meeting and the expectation of a measured reduction in rates by the Fed. Canadian Retail Sales out this morning.

Current level USDCAD                              1.3847                 Down 0.05%

The EURCAD rebounded yesterday as market start looking forward to the December BoC meeting where market participants are looking for another 50-bps cut. The currency pair remains in a 1.4900 to 1.5100 range where it spent most of time since August.

Current level EURCAD                               1.4990                 Down 0.06%

The EUR holds onto recent gain despite increase bets of a large ECB rate cut at their next policy meeting in December. The anticipation of a 50-bps rate cut was fuelled by both the dovish comments from some policy makers and the inflation rate running below the 2% target rate.

Current level EURUSD                               1.0824                 Down 0.02%

The GBPEUR bounced of the weekly low reached yesterday on what should be a quiet day for the currency pair.

Current level GBPEUR               1.1989 (.8339)                    Up 0.07%    

The GBP consolidates after recovering slightly yesterday. BoE’s Mann emphasize that service inflation needs to decline before further rate cuts. UK PMI report that business activity continues to expand in October albeit at a slower pace.

Current level GBPUSD                               1.2982                 Up 0.08%

‍