The market's attention is squarely on the upcoming US employment report. A stronger-than-expected ISM services report, which has been a key market driver this year, pushed the two-year Treasury yield to around 3.71%—its highest level since the previous employment report. The 10-year yield, which had been hovering around 3.80%, finally settled above that threshold for the first time in a month. The Dollar Index extended its rally for a fourth consecutive session, marking its longest advance in six months.
US index futures are trading slightly higher, while gold is seeing gains, trading in the $2,654-$2,668 range.
Concerns over potential escalation in the Middle East conflict have bolstered oil prices, continuing the rally that began with a 5% surge yesterday. November WTI is now trading near $74.50, up from below $69 at the end of last week.

Asia-Pacific Markets
The news flow from the Asia-Pacific region is relatively quiet today. The week’s major highlights have been the formation of a new government in Japan and the continued strong market response to China’s economic stimulus, despite mainland markets being closed since Monday.
The dollar consolidated between JPY146.30 and JPY147.15 in North American trading yesterday and is now fluctuating in the JPY145.90-JPY146.90 range.
The Australian dollar hit a session low of around $0.6830 in early North American trade yesterday and has stayed below $0.6855, with minimal upward movement above $0.6850 today.

European Markets
In Europe, the spotlight is on a faster-than-expected decline in eurozone CPI. All four of the region's largest economies have reported inflation rates below 2%, increasing the market's confidence (90%+) that the European Central Bank will cut interest rates at its October 17 meeting.
The stronger US ISM services report drove the euro closer to $1.10. Meanwhile, the British pound had a difficult day, dropping nearly 1.10%—its sharpest decline since October 2023—after falling in the prior two sessions. However, sterling has stabilized today, trading above $1.3100.

American Markets
In the US, the three-day dockworkers strike has ended, but all eyes remain on the employment report. With the Federal Reserve confident that inflation is moving toward its target, the performance of the labor market has become increasingly important.
The US dollar reached a new eight-session high yesterday, nearing CAD1.3560, with the next target in the CAD1.3600-CAD1.3650 range.