USD: Dollar holds ground amidst data return
US Treasuries are set for their first consecutive gains this month, supported by equity market weakness and renewed signs of softness in the labour market. Two‑year yields — the most policy‑sensitive point on the curve — have edged lower, yet the US dollar has remained resilient, underpinned by safe‑haven demand and broader risk aversion.
The backdrop is one of global stress: equities and crypto assets are under pressure, with the S&P 500 tracking its longest losing streak since August. Bond‑market volatility has surged to a two‑month high, reflected in the ICE BofA MOVE Index, which has risen almost uninterrupted through November. For FX, this volatility reinforces the dollar’s defensive appeal, even as the Fed debates the case for further easing.
The reopening of the US government has ended the data blackout that characterised October, when benchmark 10‑year yields drifted within a narrow 25bp range. With official releases now trickling back, yields have fresh catalysts to move. Initial jobless claims came in at 232,000 for the week ending October 18, and attention now turns to the delayed September jobs report due Thursday. For the dollar, confirmation of labour market weakness could temper Fed hesitation and revive expectations for another cut, though officials have recently signalled doubts after back‑to‑back reductions in September and October.
The Fed minutes, also due today, will be closely parsed. They are expected to highlight that, despite missing government data during the shutdown, alternative indicators suggested little change in the employment and inflation outlook since September. Some participants may even point to firmer momentum before the shutdown, complicating the case for further easing. For the dollar, this mix of safe‑haven demand, bond‑market volatility, and incoming data flow keeps it firmly at the centre of global FX dynamics.
CAD: Tentative stabilization
It appears some of the recent positive macro news is taking time to translate into a stronger CAD.
The generally upbeat macro data hadn’t quite delivered the anticipated lift for the Loonie. However, the USD/CAD is trading now closer to the $1.40 mark, making a new weekly low at 1.397, its lowest since October end. Even though the move felt overdue from a fundamental standpoint, the CAD keeps hovering around the 1.40 mark. Over the last week, the CAD has posted gains against most major currencies, suggesting a shift in sentiment may be taking hold.
Adding weight to the CAD’s recent relative strength are the latest cross-border capital flows, as detailed by Statistics Canada. There was significant move in September, with international transactions in securities resulting in a net inflow of $9.2 billion into the Canadian economy.
This strong performance was the primary contributor to a significant turnaround for the third quarter, which registered a total net inflow of $22.7 billion, the first positive quarterly inflow of the year. This momentum was largely driven by foreign investors who poured a substantial $31.3 billion into Canadian securities, the highest monthly investment since April 2024. The overwhelming majority of this activity (+$28.7 billion) was focused on Canadian debt securities, particularly new private corporate bonds and federal government money market instruments.
It’s important to keep the bigger picture in mind, though. Despite this robust quarterly strength, the cumulative cross-border transactions from January to September 2025 still show a net outflow of $61.9 billion, a stark contrast to the net inflow recorded during the same period in 2024.
While Canada attracted foreign capital, domestic investors continued their strong purchasing spree abroad, acquiring $22.1 billion in foreign securities in September, their highest investment since February 2025. This activity remains highly focused on US-denominated instruments, reinforcing a year-long trend of robust interest in the US market. Canadian investors added $12.5 billion in foreign shares (with US shares making up $10.5 billion) and $9.7 billion in foreign debt, again led by US bonds.
GBP: Softer UK inflation to weigh on sterling
Sterling slipped modestly against most G10 peers following this morning’s UK inflation release. The data confirmed a broad‑based deceleration: headline CPI printed at 3.6% (slightly above the 3.5% forecast, but down from 3.8% previously), while core was in line and services undershot at 4.5% versus 4.6% expected. The mix reinforces scope for the Bank of England (BoE) to continue easing, particularly after last week’s weaker labour market and GDP readings. The probability of a rate cut at the December meeting is now at nearly 86% compared to 75% prior to the inflation data.
For gilts, the release was supportive, with short‑end yields falling as markets lean further into the rate‑cut narrative. That erosion of yield appeal leaves the pound vulnerable. Even as GBP/USD holds above $1.30, a sustained break higher remains capped by the 21‑day moving average at $1.3184. GBP/EUR is also trading below its key daily averages, but we think downside is likely contained near €1.12 in the months ahead.
The path to a BoE December cut still depends on three hurdles: the upcoming Budget, another labour market report, and a final inflation print. Budget headlines last week effectively tested market sentiment, with fiscal prudence signalled but no firm commitments. The credibility of delivery remains in question, and political noise continues to keep sterling’s risk premium elevated.
Options markets reflect this uncertainty. Hedging costs for GBP against major peers have risen to multi‑month highs, with the Autumn Budget now only a week away. Elevated skew underscores investor caution, highlighting the event risk that could shape sterling’s trajectory into year‑end.
Nasdaq down 4% over the last week
Table: Currency trends, trading ranges and technical indicators
Key global risk events
Calendar: November 17-21
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*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.
