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Societe Generale strategists Michael Haigh and Jeremy Sellem argue that global Oil product markets have shifted from tight to critical. They link East-West pipeline disruptions, Russian outages, elevated freight and low inventories to structurally constrained supply. They highlight exceptionally high refining margins, stressed crude and product balances, and warns that current conditions leave little buffer against further shocks.

Global product balances under strain

"This week’s CCA examines the growing evidence of tightening global oil product markets. We assess the implications of the recent East-West pipeline disruption, worsening Russian refinery outages, and the increasing disconnect between crude oil and diesel markets as exceptional product tightness drives product prices higher. We also explore the sharp rise in freight rates, now up by an order of magnitude of tenfold in some key routes, and how these costs are increasingly feeding through to end-user prices."

"Finally, through a series of charts, we present the anatomy of product market tightness, showing declining inventories, weaker exports, lower refinery supply, and rising refinery outages, all pointing to an increasingly constrained global market. Refining margins are extremely high reflecting the need for products."

"Taken together, the charts suggest that product markets remain structurally tight. The persistence of margins well above historical averages across the US, Europe, and Asia indicates that the global refining system is struggling to replace lost supply, rebuild inventories, and meet demand simultaneously. This conclusion is consistent with the broader evidence of declining product exports, elevated refinery outages, low inventories, and ongoing disruptions to crude and product flows."

"The fact that product markets remain exceptionally tight despite weaker demand in two key consuming regions highlights the extent to which supply disruptions, refinery outages, and constrained exports are driving current market conditions."

"Taken together, the attacks underscore a notable escalation in the conflict and highlight the vulnerability of regional energy infrastructure. As a result, the likelihood of a severe supply shock has increased. Under a scenario where military tensions continue to intensify and disruptions become prolonged; Brent prices could rise well beyond current levels and potentially exceed $150/bbl."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

National Bank of Canada (NBC) strategist Angelo Katsoras analyzes how the 2026 United States (US) midterm elections could reshape policy under President Trump. He notes Democrats are favoured by high inflation, weak approval ratings and a strong generic ballot lead. The report outlines scenarios where Democrats take the House alone or both chambers, highlighting implications for legislation, investigations and executive action.

Midterms reshape Washington policy landscape

"The current political environment favours the Democrats. High inflation, rising gasoline and food prices, an unpopular war with Iran, the President’s low approval ratings and the Democrats' roughly seven-to eight-point lead in the generic congressional ballot all point to Democratic gains in the midterms."

"This report examines what the two most likely outcomes—Republicans losing control of one or both chambers—would mean for the President’s legislative agenda, including trade policy."

"Democratic control of both chambers would represent a major political setback for the Trump administration."

"Losing control of both chambers of Congress could weaken President Trump’s position within the Republican Party, particularly if Republicans blame him for their electoral losses."

"Finally, looking beyond the midterms, policy uncertainty is set to rise as attention turns to the priorities of the next presidential administration."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

• EUR/GBP trades around 0.8575 on Monday, virtually unchanged on the day after Friday’s decline.
• Political uncertainty in Germany limits demand for the Euro, while lower Oil prices provide some support.
• Investors turn their attention to Eurozone and UK business activity data due later this week.

EUR/GBP trades around 0.8575 on Monday at the time of writing, virtually unchanged on the day. The Euro (EUR) struggles to regain bullish momentum against the British Pound (GBP), as political concerns in Germany partly offset support from falling Oil prices.

German political uncertainty returns to the spotlight after Chancellor Friedrich Merz’s party suffered a setback in regional elections over the weekend. Merz described the result as a “disaster” while reiterating his intention to remain in office and pursue the economic reforms already underway. The political backdrop keeps investors cautious toward the Euro at the start of the week.

Lower Oil prices, however, provide a positive counterweight for the common currency. Brent crude falls below the $100 level and trades more than 8% below last week’s highs. Lower energy costs are generally supportive for Eurozone economies, which rely heavily on energy imports, as they ease cost pressures on businesses and consumers.

Investors are also assessing the monetary policy outlook for the European Central Bank (ECB) and the Bank of England (BoE), two key drivers of the interest-rate differential between the Euro and the British Pound.

ECB President Christine Lagarde stressed that upcoming interest-rate decisions will depend on economic data and will be taken on a meeting-by-meeting basis. In the United Kingdom (UK), BoE Governor Andrew Bailey suggested that further monetary tightening could still be necessary, helping the British Pound retain some support.

Rabobank sees December ECB hike as likely but largely temporary

Strategists at Rabobank say their “new energy price forecasts make another rate hike more likely than not,” and now expect the ECB “to raise the deposit facility rate by 25bp in December, to 2.75%.” They stress that “this is not a shift to a stronger policy response,” but rather a calibrated reaction to an “additional energy shock” that, in their view, “hits inflation harder and earlier than economic activity.” Against that backdrop, they argue that “some further tightening may be required to keep expectations anchored, and to prevent second round effects,” leading them to “pencil in an additional rate hike in December.”

However, Rabobank emphasises that this is not the start of a sustained tightening cycle. “Considering that energy prices should start to abate in March, we believe policymakers won’t need to keep up that appearance for much longer. Thus, we forecast just one additional hike,” they write. While they acknowledge that “the longer high energy prices persist, the greater the risks that such second-round effects could take hold,” they note that “that’s precisely what the previous two hikes and a December follow-up seek to mitigate.” As long as “data and surveys do not indicate that second-round effects may materialise, the ECB need not respond more forcefully,” they add.

In terms of the medium-term policy path, Rabobank argues that “any deposit facility rate increases above the current 2.50%” should be seen as “temporary,” and that “the ECB will probably revert these in the second half of 2027.” They also highlight that this is “another reason why we haven’t factored in a March hike yet: monetary policy famously works with long and variable lags, so the ECB will probably be looking beyond the tail-end of the energy-driven inflation spike by then.”

Market attention now turns to this week’s macroeconomic calendar. Christine Lagarde is due to speak in Frankfurt later on Monday, while preliminary September Purchasing Managers Index (PMI) data for the Eurozone and the UK, scheduled for Wednesday, could provide fresh clues about economic momentum in both regions and offer EUR/GBP a clearer directional catalyst.

Standard Chartered economists Anubhuti Sahay and Saurav Anand highlight that India’s AI-enabling goods trade deficit has become the second-largest contributor to the country’s trade gap after Oil, overtaking Gold. They argue the deterioration is mainly price-driven and expect the AI-linked deficit to rise further, adding pressure on the current account and INR, partly offset by recent NRI deposit-led capital inflows.

AI imports strain India’s external accounts

"The AI-enabling goods trade deficit is now the second-largest contributor to India’s trade deficit after oil, having surpassed the gold deficit."

"The 12-month rolling trade deficit in AI-enabling products – advanced semiconductors, processors, memory chips, data-processing units (DPUs) and networking hardware – rose to 2.0% of GDP (USD 77bn) in July 2026 from 1.5% a year earlier."

"The recent deterioration in India’s AI-enabling goods trade deficit appears increasingly price-led rather than volume-led, in our view."

"If the current trend is sustained, we expect India’s AI-enabling goods trade deficit to widen further to c.2.3% of GDP by end-March 2027, adding pressure on the C/A deficit and the INR."

"The recent surge in capital inflows, supported by policy incentives to attract non-resident deposits, is likely to anchor India’s external balance and the INR in the near term."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

TD Securities’ commodity strategists report that CTAs (Commodity Trading Advisors) have reversed recent Gold buying, yet emphasize that discretionary investors continue to support the metal. They point out Gold’s resilience after a hawkish FOMC hike and a broadly favorable precious metals backdrop. The team expects any near-term weakness to be limited and to present renewed buying opportunities for Gold.

CTA selling seen as opportunity

"For precious metals, CTAs have unwound recent buying in gold, but the market remains well-supported by underlying discretionary investment appetite."

"We highlighted on Friday that CTA buying in gold could be quickly reversed, but note that the yellow metal is still holding extremely strong after the FOMC delivered a hawkish hike."

"Despite a hiking cycle being priced in, the broader precious metals landscape remains extremely favorable, while an easing of energy prices has also offered support in the immediate term."

"With that said, we anticipate any near-term weakness in the precious metals market would be contained to only modest CTA selling, and would increasingly be seen as a buying opportunity for the yellow metal."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

• USD/CAD holds near 1.4000 as widening US-Canada rate differentials weigh on the Canadian Dollar.
• Falling Oil prices add pressure on the Loonie, while lower US Treasury yields cap the pair’s upside.
• BoC Governor Tiff Macklem’s speech takes centre stage for fresh clues about the policy outlook.

USD/CAD holds firm near the 1.4000 psychological mark on Monday as the Federal Reserve’s (Fed) hawkish outlook and widening US-Canada interest-rate differentials keep the Canadian Dollar (CAD) on the back foot. However, the pair lacks strong follow-through buying as a pullback in US Treasury yields leaves the US Dollar (USD) struggling to extend its recent gains.

US Treasury yields fall across the curve as Oil prices extend their decline. Energy prices are under pressure amid signs of diplomatic efforts surrounding the war in the Middle East and improving Saudi crude flows. US President Donald Trump said he would probably be open to meeting Iranian President Masoud Pezeshkian on the sidelines of the United Nations General Assembly this week, where he could also meet leaders from Persian Gulf countries.

The benchmark 10-year US Treasury yield trades around 4.95%, below the 5.04% level touched last week, its highest since 2007. The US Dollar Index, which tracks the Greenback's value against a basket of six major currencies, trades around 100.25, below Friday’s seven-week high of 100.56.

Falling Oil prices are another source of pressure on the commodity-linked Loonie, given Canada’s status as a major crude exporter. West Texas Intermediate (WTI) Oil trades around $93.50, falling for a fourth consecutive day and touching its lowest level in more than a week.

However, the widening gap between short-term US and Canadian yields remains the main reason behind the CAD’s recent underperformance. The currency has lost around 1% against the US Dollar so far this month.

At their respective September monetary policy meetings, the Fed raised interest rates by 25 basis points (bps) to 3.75%-4.00%, while the Bank of Canada (BoC) kept its policy rate unchanged at 2.25% for a seventh consecutive meeting. The updated dot plot showed that 16 of 18 policymakers expect at least one more rate increase this year, keeping the prospect of additional tightening firmly on the table.

Chicago Fed President Austan Goolsbee said on Monday that he is “optimistic that the Fed could get back on a path to 2% as long as there is no more evidence of demand overheating,” adding that he would have no problem with interest rates moving lower if there is “convincing evidence inflation is heading back to 2%.”

BoC focus shifts to inflation pass-through as Macklem speech looms

Analysts at Royal Bank of Canada note that BoC Governor Tiff Macklem is scheduled to speak on “economic developments” on Monday in Halifax, an event that “could provide some additional guidance ahead of its interest rate decision on Oct. 28.” They recall that at its last meeting, the BoC “flagged concerns about broader inflation implications from higher energy prices,” but emphasize that the meeting minutes “clarified that policymakers are more focused on pass-through to general inflation than on elevated oil prices themselves, which the central bank cannot influence.” Against this backdrop, RBC maintains its existing policy outlook but cautions that “risks to this forecast are tilting toward earlier hikes.”

ING strategist Francesco Pesole notes the Dollar remains supported as ING now expects the Fed to deliver one final rate hike in December. Despite near-term upside risks for the Dollar, ING keeps a gradually negative longer-term view and anticipates lower energy prices in Q4. Oil developments and meetings between President Trump and Gulf and Chinese leaders are seen as key drivers for the USD this week.

Fed path and Oil steer Dollar

"The dollar lost some ground on Friday after a reported Bank of Japan rate check (more in the JPY section below), but in our view it remains on solid footing. We recently updated our Fed call and now expect one final hike this year. December remains more likely than October, partly because of its proximity to the midterms, although stronger data and further gains in energy prices could encourage markets to add to the 13bp currently priced for next month."

"If markets assign at least a two-thirds probability to a hike by decision day, the Fed may feel compelled to act, even without full conviction, to avoid unwanted volatility at the back end of the curve."

"The scope to keep pricing a more hawkish Fed after the September FOMC remains a key argument for further US dollar gains. While we still see near-term upside risks for the greenback, our year-end and longer-term view is unchanged and gradually USD negative. We remain materially more dovish than market pricing on the Fed and continue to use a sharp decline in oil prices in 4Q as our baseline scenario."

"With little on the data calendar, oil should be the key driver for the USD this week. Investors will focus on US President Donald Trump’s meetings with Gulf state representatives, reportedly taking place in New York alongside the UN General Assembly. Crude has softened in recent days, but the market still lacks enough encouraging news to push prices back below $100/bbl."

"Trump is also due to meet Chinese President Xi Jinping in Washington on Thursday. While this shouldn’t be a major market event, positive trade headlines could provide some support to the dollar."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

OCBC’s Christopher Wong notes that the Japanese Yen (JPY) weakened after the BoJ’s 25 bp hike to 1.25% as limited guidance on further normalisation disappointed hawkish expectations. Wong highlights that USD/JPY remains driven by UST–JGB spreads and thin liquidity, with resistance around 158–159 and support near 155–153, while firmer inflation, wages and intervention risks could cap Yen downside.

BoJ’s cautious tone tempers Yen support

"JPY weakened after the BoJ raised its policy rate by 25bp to 1.25%, its highest in over 3 decades. The hike was widely expected, but the 7–2 vote and relatively limited guidance on the pace of further normalisation disappointed expectations for a hawkish signal."

"At the press conference, Governor Ueda did signal a change in thinking, noting that with underlying inflation nearing 2%, policy is moving into a “new stage” where the focus is increasingly on keeping inflation around target and containing upside risks. He also did not rule out consecutive or larger hikes if conditions warrant."

"But there was little indication that the BoJ is in a hurry. Ueda stressed the need to avoid tightening financial conditions too quickly and pointed to next year’s shunto as an important gauge of whether wage-price dynamics remain intact. This does not necessarily mean that BoJ will wait until spring to move again, but it does suggest a high bar for a much faster pace of tightening."

"Near term, JPY may remain volatile, with UST-JGB yield differentials still an important driver while thin liquidity (due to JP hols on Mon – Wed) may exacerbate FX moves. Firmer domestic inflation and wage data, intervention risk or signs of repatriation flows could help limit JPY downside."

"USD/JPY last closed around 156.90 levels. Daily momentum is mild bullish while RSI rose. Rebound remains intact despite a hanging-man pattern in the preceding session, as the latest candle on Friday failed to provide bearish confirmation and instead saw renewed upside pressure. That said, some gains were retraced into the close,suggesting interim resistance is emerging around 156.70–157.00 (21 DMA)."

"Sustained break above this level may open room for the pair to attempt higher again. Next resistance at 158 (50% fibo retracement of 2026 low to high), 158.40 (100 DMA) and 159 (50 DMA). Support at 155 (23.6% fibo), 153 levels."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

• The US Dollar holds previous week’s gains driven by the Fed’s tightening bias.
• Traders seem confident that the Fed will deliver at least one more interest rate hike this year.
• Market experts said that the Fed’s tightening bias could remain strengthened by strong US data.

The US Dollar (USD) trades slightly higher on Monday as traders remain confident that the Federal Reserve (Fed) will hike interest rates again this year. At press time, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades 0.1% higher to near 100.30.

According to the CME FedWatch tool, the odds of the Fed delivering at least one more interest rate hike this year are almost 88%.

Traders repriced hawkish Fed bets after the latest dot plot unveiled at Wednesday's policy meeting showed that 16 of 18 policymakers projected at least one more interest rate hike this year. The central bank hiked policy rates by 25 basis points (bps) to the 3.75%-4.00% range last week.

Since the Fed’s monetary policy announcement, the US Dollar has gained 0.5% so far. Market experts have stated it is evident that the DXY’s strength is backed by an increase in Fed interest rate hike expectations, but have clarified that the maintenance of strength and further gains hinge on the upcoming United States (US) data.

USD support underpinned by Fed bias, but further gains hinge on data

Analysts at HSBC note that the USD “strengthened following the decision.” They highlight that “the median 2026 ‘dot’ implies one additional hike before year-end,” with “a significant minority of participants still anticipating a further rate rise in 2027.” HSBC argues that “this path is more hawkish than a ‘one-and-done’ outcome but remains below current market pricing,” meaning they “do not expect a major repricing of rate expectations or the USD.” Instead, the bank expects that “the market’s attention is likely to focus on whether incoming data validate the final projected increase this year,” suggesting any further US Dollar gains will hinge on how the economic data track against the Fed’s projected path.

Meanwhile, Deutsche Bank’s Jim Reid and his colleagues flag that, in the wake of the Fed’s latest move and ahead of the October FOMC meeting, “the focus will increasingly shift towards next Friday’s payrolls report,” which they describe as “the most important data release before the October FOMC meeting.” The bank added that this print will be pivotal for markets assessing whether Fed policy is becoming meaningfully restrictive and for validating the recent strengthening in the US Dollar Index.

Analysts at OCBC highlight that the Fed’s “renewed tightening bias should keep some support under the USD” in the near term. However, they caution that “after the repricing last week, the hurdle for another meaningful leg higher may be higher,” suggesting that the Greenback’s upside momentum is likely to be more constrained from here. In their view, “further gains may increasingly require another move up in yields or firmer US data that reinforce expectations for additional tightening.” This underscores the growing dependence of additional USD strength on either higher US Treasury yields or a fresh run of robust economic data.

US Dollar Index Technical Analysis

On the daily chart, US Dollar Index Spot trades at 100.25. The near-term tone is bullish as price holds above the 20-day Exponential Moving Average (EMA) at 99.62, suggesting buyers have reasserted control after reclaiming this dynamic support. The Relative Strength Index (RSI) at roughly 62 stays in positive territory without yet signaling overbought conditions, hinting that upside momentum remains constructive.

On the downside, immediate support emerges at the 20-day EMA around 99.62, where a break would expose a deeper corrective phase back toward recent lows. As long as the index defends this moving average, the path of least resistance remains higher, with the absence of nearby mapped resistance leaving room for the US Dollar Index to extend gains before confronting a more meaningful supply zone.

(The technical analysis of this story was written with the help of an AI tool. Know more.)