**United States**
Today, the U.S. forex markets are showing a stronger dollar as tensions heighten in the Middle East. All eyes are on tomorrow’s critical employment report. Among global currencies, the U.S. dollar is in high demand partly because of uncertainties shifting currencies from sterling, which has been notably affected. Meanwhile, the 10-year U.S. Treasury yield is once again moving toward the 3.80% mark, a level it hasn’t closed above for a month. The market is also anticipating a potentially impactful U.S. employment report tomorrow for September. Despite a full slate of economic data today, G3 economic growth in Q3 is expected to hold steady. The service sectors are particularly sensitive to ISM services rather than final PMI readings. Yet, the futures market indicates about a 40% chance of a half-point Fed rate cut next month, which remains uncertain given recent Fed Chair Powell’s comments and the GDP revisions.
**Eurozone**
Early this week, the Eurozone CPI fell below 2%, reinforcing expectations of a European Central Bank rate cut later this month and in December. The final PMI reading, revised slightly higher, hasn’t drawn much attention, but the anticipated producer prices will emphasize the broader disinflationary context. The euro weakened for the fourth straight session, slipping below Tuesday’s low to slightly under $1.1035. There’s little technical support until $1.10, while previous support levels now form resistance. Meanwhile, the macroeconomic picture for the Eurozone remains deflationary.
**United Kingdom**
The British market took a hit today largely due to Bank of England Governor Bailey’s signals of potential shifts in monetary policy. Sterling slipped nearly 1% following the governor’s remarks, with increased speculation of a 50 bp rate cut before the year ends. Though the UK PMI was revised slightly lower, it holds resilient compared to the Eurozone. Bailey’s interview with The Guardian dropped a clear hint at more aggressive monetary easing.
**China**
The Japanese yen’s decline and a rise in U.S. yields pressured the Chinese yuan. After breakthroughs yesterday, the dollar has overcome key resistance against the yuan, pushing to new session highs near CNH7.0370. Today, it breached CNH7.05, with local resistance seen near CNH7.0640, then CNH7.07.
**Japan**
Today’s attention in Japan focuses on potential fiscal policy adjustments under the new government, apart from the recent election preparations. The rise in U.S. Treasury yields, alongside confirming comments from BOJ Governor Ueda about not rushing interest rate hikes, helped the dollar recover against the yen. Yesterday’s follow-through buying elevated the dollar against the yen to new heights, indicating potential movements back toward JPY150.
**Canada**
Canada is anticipating its services and composite PMI today, which, although new, likely won’t radically affect the Bank of Canada’s trajectory. The swaps market anticipates about a 55% likelihood of a 50 bp cut in the October 23 meeting and up to 75 bp in cuts over the last two meetings of the year. Despite bearish signals against the Canadian dollar, the market found some balance yesterday with resistance seen around CAD1.3540-60.
**Australia**
In Australia, a larger than expected August retail sales number is providing hope for the upcoming household spending report. Despite an otherwise subdued month with both exports and imports down 2%, this internal demand guards against a near-term rate cut even as futures markets point toward a 62% chance of a rate hike in early December. Meanwhile, Australian dollar advances against the New Zealand dollar point toward continued currency dynamics within the region.
**Mexico**
The Mexican peso was one of the few emerging market currencies to see appreciable gains yesterday, rising for a third straight session against the U.S. dollar. Eyebrows lifted when President Sheinbaum assured foreign investors with positive remarks, although conflicting signals from the central bank stirred some concerns. Still, sentiments appear to favor peso strength as investors took profits and refocused positions. The peso saw renewed resilience, hovering consolidatively in a range of MXN19.40–MXN19.50 today.
