The USD gained 0.3% in risk-off trading yesterday, appreciating against all G10 counterparts except the Canadian Dollar. For the first time in nearly 50 years, dockworkers at East and Gulf Coast ports staged strikes, potentially disrupting supply chains if prolonged. Crude oil, gold, and US Treasuries rose along with the USD amid heightened Middle East tensions, as Iran launched ballistic missiles into Israel.

The US JOLTS jobs report exceeded expectations, reaching its highest level in three months. While job openings increased, the declining quit rate suggests workers may be more hesitant to leave their current positions. The ISM Manufacturing report's employment gauge recorded its lowest reading since May 2020.

Today's ADP employment report showed 143k job additions in September, compared to a median forecast of 125k, with a slight upward revision to the previous month's data. Risk markets remain on edge as investors await Israel's anticipated response to Iran's missile barrage. The Japanese Yen is underperforming among G10 currencies today after new Prime Minister Ishiba ruled out near-term interest rate hikes, citing a weak economy. BOJ Governor Ueda echoed this dovish sentiment in his remarks. Several Fed speakers, including Bowman and Barkin, are scheduled to speak today.

EUR/USD declined 0.6% yesterday and is 0.25% lower today, trading about 1.2% lower than this time last week. Yesterday, the ECB's flash CPI estimate for September fell below 2% for the first time since July 2021, reinforcing investor expectations for another 25 basis-point rate cut at the upcoming October 17th ECB rate decision. Speaking to the EU Parliament after the data release, Lagarde hinted at growing optimism regarding inflation returning to target in a timely manner. ECB's Rehn also expressed a similar view, stating that the recent weakening of the euro area's growth prospects could support a rate cut at the October meeting. The October 17th rate decision is currently priced for a rate cut with a 96% probability.

GBP/USD dropped 0.65% yesterday and is 0.2% lower today, trading approximately 0.95% lower than this time last week. Speaking at a conference in Nashville, the BOE's Greene warned that rising consumption could lead to higher prices, as companies may feel emboldened to pass on increased costs to consumers.

USD/CAD fell 0.25% yesterday and is 0.1% lower today, trading 0.3% higher than this time last week. The sharp rise in crude oil prices yesterday (+3.5%) due to escalated Middle East tensions supported the Canadian Dollar, making it the top-performing G10 currency. We are seeing continued moderate CAD outperformance today, as crude oil prices rise another 1.9%. The next major domestic data releases for Canada are international trade (next Tuesday) and employment (next Friday). The next BOC rate decision is scheduled for October 23rd.