The Morning Update

The USD slips, oil prices firm, equity markets are up, and US yields rise with the US election and earnings in focus. Currency markets hold steady ahead of a week of key earnings and data releases. Equity markets extend gains as investors await earnings from five US big tech companies this week, which represents nearly 42% of the S&P 500's market capitalization. Investors remain cautious ahead of a raft of key economic data later in the week that will help provide direction for the Fed's next interest rate decision, as well the US presidential election is just a week away. Elsewhere, oil prices steady after Monday's rout, Bitcoin rallied 2.2% through $71k, and Gold & Silver prices both strengthened in early trading. In focus today is the Alphabet Inc. earnings report, US Housing Price Index, Consumer Confidence, Jolts Job Openings, and BoC's Governor Macklem speech, which will help provide intraday direction to markets.

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In other news. Harris, Trump battle for swing-state votes with just 7 days before the US election. Boeing raises $21 billion in capital to repair balance sheet. Washington Post's Bezos defends decision to end presidential endorsements. China's Xi pressed Biden to alter language on Taiwan. BP profit slumps to near four-year low as oil demand sags. Hezbollah elects Naim Qassem to succeed slain head Nasrallah. Eyeing the US election, China considers over $1.4 trillion in extra debt over the next few years. BC lieutenant governor asks NDP leader David Eby to form a government. Israeli parliament passes law banning UN Palestinian refugee agency.

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In currency markets. Currency markets hold within tight trading ranges ahead of a flurry of key data releases in the latter part of the week. CNY & Asian currencies eased by 0.15% on average against the USD. Trading currency markets remain within current ranges, with JPY, MXN, CHF & AUD down 0.1%, NZD, ZAR & SEK flat, and NOK strengthening 0.45% against the USD.

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In commodity markets. Oil & wheat prices firmed by 0.5%. Natural Gas prices tumbled by 3%. Gold, Wheat & soybean prices up by 0.35%. Silver prices strengthened by 0.7%. Copper prices rallied by 1.1%.

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CAD finds some relief as oil prices edge higher after Monday's route, allowing the loonie to ease off 12-week lows against the USD. Monday, BoC Governor Macklem said that the BoC will have to "discover" the neutral rate - the theoretical level between borrowing costs that neither stimulates nor restricts the economy as it eases its monetary policy. Many economists expect the BoC will cut a further 50bps between November and December, possibly taking rates to 3.25% by the end of 2024. Intraday, alongside US data releases, BoC Macklem is speaking again and could provide more guidance to the loonie today.

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EURCAD eases as the loonie finds support from the rebound in oil prices, but both currencies are sidelined ahead of a flurry of key data releases later in the week.

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EUR continues to steady above 1.0800 amid improving risk sentiment. Euro remains trapped within a tight trading range with the absence of high-tier data releases to provide direction. On Monday, ECB VP Luis de Guindos said that the central bank had made progress on bringing down inflation but added they can't declare victory. Intraday, US Jolts Job Openings, and consumer confidence may provide some direction to the single currency.

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GBPEUR holds steady as investors remain sidelined ahead of Wednesday's UK budget.

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GBP stalls below 1.3000 as investors cautiously await the UK Budget tomorrow. The pound found support from improving risk sentiment, but gains are limited by expectations of smaller Fed rate cuts as markets focus on US jobs data and corporate earnings this week. Investors are expected to remain sidelined ahead of Labour's first budget in 14 years. Chancellor Reeves warned that the budget will involve "difficult decisions" after numerous comments that the Labour government inherited the worst set of circumstances since the Second World War.

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