The Morning Update

The USD holds steady, oil prices strengthen, equity markets are mixed, and US yields ease as markets remain focused on stimulus and rate news. The USD edges higher following the Fed's comments for a "measured approach" to rates, while the NZD tumbled after New Zealand's Reserve Bank cut rates by 50 bps. Equity markets are mixed with US Futures slipping on the news that US authorities are weighing an antitrust crackdown on Google's owner Alphabet Inc., as well as less dovish comments from the Fed. On rising stimulus skepticism, China's Shanghai index tumbled 6.6%, the most since 2020. European & UK equity markets were up, finding support from renewable energy companies following the IEA report predicting massive growth in the renewable power sector. Today, investors will be focused on the Fed meeting minutes, ahead of Thursday's crucial US inflation report. Elsewhere, oil prices rebound after easing on a potential Mideast ceasefire, Bitcoin and Gold are flat, while Silver prices rally 1%. In focus today, the FOMC minutes and Fed's Daly & Jefferson speeches will help provide intraday direction to currency markets.

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In other news. The US weighs a Google break-up in a landmark antitrust case. Chinese stocks tumble as Beijing tries to shore up confidence in the economy. Israel cancels the defense minister's visit to the US. Hurricane Milton strengthened again as Florida residents urged to leave. Boeing halts talks, withdraws pay offer to striking union. Rio Tinto goes all in on lithium with a $6.7 bln Arcadium buy. ECB policymakers press the case for an October rate cut. British Foreign Secretary Lammy to visit China in a bid to rest ties. French lawmakers weigh the political risk of curbing boomers' costly pensions. UofT researcher Geoffrey Hinton wins the Nobel Prize in Physics.

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In currency markets. Petro currencies remain under pressure following yesterday's tumbling crude prices. The USD holds steady ahead of Thursday's US inflation report. NZD tumbled following the RBNZ 50 bps interest rate cut. CNY slips by 0.1%, while Asian currencies are flat on average against the USD. Trading currencies remain under pressure, with NZD tumbling 0.9%, NOK weakening 0.45%, JPY, ZAR & SEK easing 0.3%, AUD falling 0.15%, and CHF & MXN flat against USD.

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In commodity markets. Oil & silver prices strengthened by 0.95%. Natural Gas prices tumbled by 1.3%. Gold is flat. Copper prices weakened by 0.5%. Wheat prices rallied by 1.5%, and Soybean prices firmed by 0.5%.

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CAD remains under pressure, holding near a seven-week low on expected interest divergence between the Fed & the BoC in Q4, and the ongoing risk-off sentiment with China stimulus uncertainty. Oil, one of Canada's major exports, remains volatile on the combination of Mideast uncertainty and Hurricane Milton impacting the Gulf Coast productions. Investors will be monitoring the FOMC minutes, Thursday's US Inflation, and Friday's CAD Unemployment report which will provide direction for the loonie this week.

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EURCAD holds steady with expectations of both the BoC & ECB cutting interest rates in October.

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EUR continues to edge lower as the EBC rate cut rhetoric increases. Euro has weakened nearly 1.5% in October as investors continue to favor the USD on the prospect of an increasing divergence of interest rates between the Fed & the ECB. The euro has also felt the pressure from China's stimulus skepticism & the ongoing Mideast tensions which have negatively impacted risk sentiment. Intraday investors will be focused on the FOMC minutes and tomorrow's US inflation report to provide short-term guidance to the Euro.

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GBPEUR holds stable with the absence of any high-tier economic data to provide any short-term guidance to the cross.

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GBP holds near multi-week lows as a less-dovish Fed & adverse risk sentiment keeps pressure on the pound. The pound has fallen over 2% against the USD so far in October, with the pound coming under pressure from dovish comments from the BoE Governor Bailey. Tuesday's comments from China's NDRC state planner on Tuesday said, that the downward pressure on China's economy is increasing, adding that they are facing more complex internal and external environments. We expect the pound to steady near current lows ahead of Thursday's crucial US inflation report.