Nvidia Earnings Take Center-Stage

STOCK INDEX FUTURES

The indexes are higher, with the Nasdaq and S&P leading gains while the Dow edged higher ahead of Nvidia’s highly anticipated earnings release after the bell today. Global equity markets have been hit hard over the last four trading sessions as concerns over AI valuations and Fed policy have led investors to reposition portfolios and offload some positions. The FOMC’s meeting minutes from October will be released today before the market closes, offering some clues into policymakers’ opinions over the labor market and giving markets an opportunity to gauge the board’s urgency to cut rates.

Nvidia’s third-quarter results are expected to swing the stock up to 7% in either direction as well as prove to be a potential make-or-break moment for this year’s AI rally. Unease over massive corporate borrowing and spending has resulted in multi-day declines in the tech sector. Elsewhere on the corporate front, Target cut its earnings outlook and flagged a weak holiday season, while Lowe’s posted upbeat sales, offering an unofficial gauge on consumer spending in the absence of official data.

Existing Home Sales on Thursday, S&P PMIs, and the University of Michigan Consumer Sentiment and Inflation Expectations to round out the week on Friday.

CURRENCY FUTURES

US DOLLAR: The USD index is higher, advancing strongly against the pound, yen, and Australian dollar. The dollar is likely gaining support from safe-haven flows amid a pullback in global equity markets and as markets eye Thursday’s September labor report. The report is likely to shape Fed members’ opinions on policy at the December meeting. Expectations of a December cut are a toss-up. Fed Funds futures are pricing just under a 50% chance of a rate cut, while Fedspeak has remained mixed, reflecting a divide among policymakers. Richmond Fed President Thomas Barkin said he was reluctant to give his guidance on December’s meeting until he sees more data on labor and inflation, adding more significance to Thursday’s data release.

EURO: The euro is little changed against the dollar, holding around the $1.1580 level as markets await Thursday’s labor report and policy signals out of the US Fed. There is little data out of the eurozone this week, and with the European Central Bank expected to hold rates steady for the foreseeable future, monetary policy expectations out of the US are likely to serve as the main catalyst for euro direction. CPI inflation for the eurozone was confirmed at 2.1% in October, next to the ECB’s 2% target. On Monday, ECB Vice President Luis de Guindos expressed confidence that eurozone inflation will converge toward the bank’s target, while the European Commission on Monday raised its economic forecast for 2025 to 1.3%, up from 0.9%. Looking ahead, Flash PMI data for France, Germany, and the Eurozone on Friday will grab attention. Eurozone manufacturing is expected to show a slight expansion, with contractions in Germany and France moving closer to stabilization. Services activity is projected to remain strong.

BRITISH POUND: The sterling fell as inflation data showed continued progress on disinflation, strengthening the case for a December interest rate cut from the Bank of England. The UK’s annual inflation fell to 3.6% from 3.8%, matching expectations and hitting its lowest level in four months thanks to a slowdown in gas and electricity prices. Notably, for BoE policymakers, services inflation fell to 4.5% from 4.7% in September, while core inflation dropped to 3.4%, a six-month low. The lower inflation reading reflects the easing in pay growth in the country, and on the backfoot of a sluggish GDP reading last week, the BoE should feel confident about cutting rates in December. The central bank expects inflation to have peaked at 3.8%, recorded in August and September, so any upside move in inflation moving forward would certainly surprise markets and strengthen the sterling; however, it is unlikely given the macro disinflationary pressures. Upcoming PMI data for November will be the next test for the pound, as manufacturing is expected to show a further contraction in activity, while growth in the services sector is likely to moderate. A sluggish PMI reading will likely add to bets of a BoE rate cut and see the pound fall further. Markets also remain attentive to the UK budget scheduled for release on November 26, where Finance Minister Rachel Reeves is expected to adjust tax thresholds.

JAPANESE YEN: The yen dropped to a 10-month low against the dollar after a meeting between Bank of Japan Governor Kazuo Ueda and key government ministers on Wednesday, including Finance Minister Satsuki Katayama, where the officials agreed to closely watch FX movements “with a strong sense of urgency.” Despite the strong wording, the comments did little to move the yen, signaling that it will take actual intervention from government authorities to bring any upside strength to the currency.  The yen has fallen on the back foot on expectations that Prime Minister Takaichi’s administration will bring a large spending package, which is expected to be sized around 17 trillion yen ($110 billion). Bank of Japan Governor Kazuo Ueda met with Takaichi on Tuesday and said that Takaichi did not make any request on monetary policy and acknowledged his argument that gradual rate hikes will help the economy achieve sustainable long-term growth. Ueda has signaled there is a possibility of raising interest rates as soon as next month, although the economy must show signs that wage growth can be sustained. Takaichi’s Abenomics-style policies are also likely to keep pressure on the yen.

AUSTRALIAN DOLLAR: The Aussie dropped amid investor caution despite data showing that wages grew at a steady pace in the third quarter. Anxiety over results from tech giant Nvidia has weighed on risk-sensitive assets, such as the AUS, despite it being rare that a single earnings release has an impact on the FX market. The Aussie could trade in line with expectations. On the data front, Australia’s seasonally adjusted Wage Price Index rose by 3.4% year-on-year in Q3 2025, unchanged from the previous quarter and in line with market expectations. The data relieved some fears that hot wage growth would further pressure inflation, as the Reserve Bank of Australia has likely ended its easing cycle in response to an uptick in inflation, a tight labor market, and solid economic activity. On Thursday, RBA’s chief economist, Sarah Hunter, will speak and is expected to offer hawkish remarks.

INTEREST RATE MARKET FUTURES

Futures are higher across the curve, reversing some overnight selling ahead of today’s 20-year bond auction, which could see some selling beforehand. The FOMC will release its October meeting minutes today, which could shape expectations of December’s meeting and give insight into how policymakers are viewing the labor market in the absence of recent data. Data from the Cleveland Fed showed that 39,000 Americans were given advance notice of layoffs last month, and a report from ADP Research showed that employers cut 2,500 jobs a week on average during the four weeks ending November 1. Thursday’s highly anticipated September jobs report is likely to shape expectations of December’s meetings, with expectations of a rate cut at nearly 50-50.

President Trump on Tuesday said that his administration has started interviews for the next Fed Chair while reiterating that Treasury Secretary Scott Bessent does not want the job. An obvious candidate is Fed Governor Waller, who has been in favor of rate cuts over the last several meetings. Trump told reporters, “I think I already know my choice,” before saying, “We may go the standard way. It’s nice to every once in a while go politically correct.” The administration is likely to put a dove in the place of Powell’s spot, which would naturally tilt the board to a more dovish stance. The five candidates on the shortlist are Fed governors Waller and Bowman, former Fed governor Kevin Warsh, NEC Director Kevin Hassett, and BlackRock head of fixed income Rick Rieder. However, given recent threats on Fed officials from the Trump administration, paired with the appointment of Governor Miran, Fed governors may feel more emboldened to break from groupthink and the Chair’s opinions. This could consequently result in a more independent Fed than in years previous.

The spread between the two- and 10-year yields rose to 54.20 bps from 53.20 on Tuesday, while the 2-year yield, which reflects interest rate expectations, fell to 3.564%.

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