The USD holds steady, oil prices tumble, equity markets are up, and US yields rise amid improving risk sentiment. The USD is sidelined, while the JPY weakens following the weekend's election, leaving no party with a clear mandate in the world's fourth-largest economy. Equity markets extended gains as risk sentiment improved amid de-escalating Mideast tensions after Israel's retaliatory strikes against Iran avoided oil facilities. On the opposite side of the coin, oil prices tumbled over 6% after Iran downplayed the Israeli strikes. This week will be a pivotal week for markets with the results of five of the "Magnificent Seven" big-tech companies, which are expected to post their slowest collective quarterly earnings expansion in six quarters, according to Bloomberg Intelligence. Elsewhere, Bitcoin extended gains to $68k, while Gold and Silver prices eased in early trading. Alongside tech earnings, markets will be focused on several other key events this week. Monday, BoE Governor Macklem Speech. Tuesday, German GFK Consumer Confidence Survey, US Housing Price Index, boC Governor Macklem speech. Wednesday, UK Budget, German GDP report, EU GDP report. US ADP Employment Change, US GDP report, German CPI. Thursday, BoJ Press Conference, German Retail Sales, EU CPI report, US Core PCE. Friday CHF CPI, US Average Hourly Earnings, Nonfarm Payrolls, and US Manufacturing PMI will help provide intraday direction to markets this week.
In other news. Japan's PM vows to stay on after election debacle. Russia hampering climate data collection in the Arctic, NATO warns. Egypt proposes a short Gaza truce with a small hostage-prisoner exchange. Boeing plans to launch an effort to raise over $15 billion in capital as early as Monday. China Jan-Sept gold consumption slides 11% as high prices deter buying appetite. Britain's Labour government to deliver debut Budget this week, settling weeks of uncertainty. Canada, BC elections are still on a knife edge as some races remain undecided. China's industrial profits plunge as economic momentum falters.
In currency markets. JPY weakened after Japan's election, while the USD is set for its biggest monthly rise in 2 1/2 years. CNY and Asian currencies slipped by 0.1% on average against the USD. Trading currencies are mixed, with the MXN falling 0.55%, JPY & NOK weakening 0.4%, AUD, CHF & NZD down 0.1%, ZAR Flat and SEK is up 0.1% against the USD.
In commodity markets. Oil prices tumbled by 6.4%. Natural Gas prices plunged by 4.3%. Gold & Copper prices dropped by 0.5%, Silver prices eased by 0.9%. Wheal prices slipped 0.2%, and Soybean prices weakened by 0.75%.
CAD starts the week holding at 12-week lows against the USD and has the potential to weaken towards 1.3950 as oil prices plunge and from increasing pressure from the widening BoC & Fed interest divergence. Investors will be focused on BoC Governor Macklem's speech today, looking for any signals for further interest rate cuts in November. Last week, the BoC cut rates by 50bps to 3.75%, economist & commentator David Rosenburg says the Bank of Canada should continue cutting its key interest rate by 50bps in upcoming decisions in order to balance out demand and supply in the Canadian economy.
EURCAD weakens in early trading as tumbling oil prices continue to put pressure on the Loonie.
EUR edges through 1.0800 as global risk appetite improves amid easing Mideast tensions. Euro edges higher, but further gains look limited with strong US yields, and an increasingly more dovish ECB is expected to limit further significant euro gains. Intraday, the lack of any high-tier European or US economic data releases, we expect to see the single currency hold within current trading ranges.
GBPEUR is sidelined ahead of key UK budget and Eurozone inflation reports this week.
GBP consolidates above 1.2950 as investors are sidelined with the absence of key economic data releases today. The pound is finding some support from a pick-up in risk sentiment, easing BoE rate cut expectations, and de-escalating Mideast tensions. Investors will be focused on Wednesday's UK budget after weeks of uncertainty over potential tax hikes and spending cuts from Labour's first budget in 15 years. Intraday, we expect the pound to hold within its current range with the lack of any high-tier data releases today.
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