The markets are calm, but anxiety continues to run high

The threat of the war spreading in Israel remains palpable. Capital markets are still relatively calm.

The US dollar has weakened after a strong closing last week. Swiss Franc is the only G10 currency that has not seen a correction today.
Gold's gains, which were up 3.4% by the end of last weekend, are down nearly 0.9% on today.
WTI December rallied by 5.5% to $86.35 before the weekend. Today, it saw some follow-through selling before falling back to $85.65.

Asia Pacific
Japan's industrial production was lower in August than the preliminary estimate. Instead of being flat, Japanese industrial output fell by 0.7% month-over-month. This lowered the rate year-over-year to -4.4%, not -3.8%, after a pace of -2.3% in July.
Before the weekend, Suzuki, the Finance Minister, told reporters that excessive moves were undesirable and that at times, an "appropriate reaction" would be required on the foreign exchange markets.

Before the weekend, the dollar was restricted to a small range of less that 40 pip against the yen. The dollar settled at a low of JPY149.45. Today, it fell to JPY149.30.
The Australian dollar reached its lowest settlement for the year last week. Today, it has recovered a little bit through $0.6330 to reach the high of $0.6335 from pre-weekend.

Europe
Although the trade balance of the eurozone has not recovered to pre-Russian-Ukraine conflict levels or pre-Covid, it is improving. The August seasonally adjusted trade surplus was 11,9 billion euros.
US and EU will meet at the end the week. Three topics dominate the conversation: Middle East, China, and Russia/Ukraine. The price caps for Russian oil, and the use made of the profits generated by Russia's frozen assets are being discussed.

The euro, which had a negative outside day following the US CPI report, continued to slide lower ahead of the weekend, slipping a little below $1.05 but still closing above it. Today, it has reached almost $1.0545.
Last Friday, sterling was traded to new weekly lows at a bit below $1.2125. Today, it is gaining strength and has reached nearly $1.2180.

America
The University of Michigan, on top of the stronger than expected US CPI and PPI last week reported a rise in inflation expectations towards the end of the last week. Expectations for the final two FOMC meetings are still low.

Today's US economic agenda includes the NY State Manufacturing Survey, where it is expected that the diffusion index will fall into negative territory. Also, the US budget statement for September.
The Fed has a busy week of speakers. Thirteen different speakers will be speaking, with Powell's speech to the Economic Club of New York being the highlight.

Canada also has a very busy week of data. The Bank of Canada will probably be a focus of attention for the market when it releases its survey of business prospects.
The US dollar is quietly trading in the European morning under CAD1.3650. Initial support could be near CAD1.3620.