Daily Currency Update

USD - US Dollar

The USD is weakening as equity markets rise and US yields decline. USD losses continue to extend from yesterday. While month-end rebalancing flows could influence the markets today, there doesn't seem to be a significant signal from stocks at the moment. Major equity indices in the US, Europe, and Asia have all declined by approximately 3-3.5% over the month. The primary driver of USD softness in this session appears to be lower US bond yields, with the 10Y yield dropping to nearly 4.80% this morning. Market volatility is on the rise, and there are several upcoming event risks to consider, including the FOMC decision on Wednesday (preceded by the Treasury's refunding announcement), the BoE meeting on Thursday, and US and Canadian jobs data to be released on Friday.

CAD - Canadian Dollar

The CAD has gained some ground against the USD today, albeit only slightly, with the current spot rate hovering in the low 1.38s. Governor Macklem and Senior DG Rogers testified before lawmakers yesterday and reiterated the key points discussed in last week's policy meeting outcome. They emphasized that while the economy is experiencing a slowdown, inflation expectations and wages remain elevated. Policymakers are cautious and are waiting for more evidence that core inflation is indeed slowing. This morning, the CAD's fair value estimate stands at 1.3790, representing a slight decrease compared to yesterday. The August GDP report, which may seem like a distant past, is expected to show a 0.1% increase for the month and a 0.9% increase for the year, according to consensus forecasts. Observe USD/CAD trends.

EUR - Euro

This morning, EUR/USD appears to be showing significant activity, but the majority of buying has occurred in the late hours of the European morning trade. Reports on Eurozone data for October have indicated a slowdown in inflation, and in line with yesterday's German data, Q3 GDP figures were weaker than anticipated, albeit with a slight upward revision for Q2. Interestingly, the softer data haven't had an evident negative impact on the EUR.

GBP - British Pound

Sterling is exhibiting some strength today, although these gains appear to be driven more by a broader weakening of the USD rather than any inherent support for the GBP. Overnight, there were reports from secondary surveys indicating somewhat improved business conditions. However, this data is not expected to play a major role in influencing the Bank of England's decision on Thursday. Meanwhile, the GBP is continuing to lose value against the EUR, reaching its lowest level against the euro since May.