The euro weakened toward $1.135, its lowest level since June 26, as investors weighed comments from ECB President Christine Lagarde while the US dollar remained supported by fading optimism over US-Iran talks and growing expectations of further Federal Reserve rate hikes. Lagarde said the inflation outlook for 2027 and 2028 is now higher than policymakers expected a few months ago, mainly due to higher energy prices, but noted there is no evidence yet of energy costs feeding into higher wages. She added that while the shock is too significant to ignore, a measured policy response remains appropriate to keep inflation under control. Money markets are pricing in roughly 100 basis points of ECB rate hikes by the end of 2027. In the US, hawkish Fed commentary, alongside data pointing to resilient economic growth and a firm labor market, has reinforced expectations for tighter monetary policy and sent the dollar to two-month highs.

Mexico’s trade balance posted a surplus of $605 million in August 2026, widening from $209 million a year earlier but falling well short of forecasts of $1.4 billion. Total merchandise exports reached $78.01 billion, up 40.4% year over year. Manufactured goods exports rose 42.6%, led by electrical and electronic equipment and appliances (122.3%), mining and metallurgical products (50.4%), plastic and rubber products (10.6%), food, beverages and tobacco (10%), and specialized machinery and equipment for various industries (7.2%). Agricultural and fishing exports fell 1.6%, while oil exports declined 2.8%. Merchandise imports totaled $77.40 billion, with consumer goods imports up 8.9%, intermediate goods purchases surging 41.9%, and capital goods imports rising 6.9%. In the first eight months of 2026, the trade balance recorded a $9.86 billion surplus.

India’s industrial production growth accelerated to 8.0% year-on-year in August 2026, up from an upwardly revised 7.4% in July and well above market expectations of 6.5%. Manufacturing output rose 9.0%, accelerating from 8.2% in July, led by electrical equipment (30.9%), motor vehicles (25.2%), rubber and plastics products (21.4%), computer, electronic and optical products (19.3%), fabricated metal products (16.9%), textiles (13.1%), and machinery and equipment (10.3%). Among other major industries, basic metals production increased 2.4% and food products rose 2.8%, while output contracted in coke and refined petroleum products (-0.6%) and chemicals and chemical products (-0.5%). Elsewhere, electricity and gas supply growth accelerated to 12.3% from 8.7% in July, while mining and quarrying output fell 5.6%, following a 0.9% decline in the previous month.

Crude oil climbed more than 2% to above $94 a barrel on Monday, recovering from a 2.3% decline in the previous session as uncertainty surrounding US-Iran diplomacy kept supply risks elevated. Tehran continues to support a proposal that US President Donald Trump has rejected, calling for the lifting of a US naval blockade and oil sanctions as conditions for reopening the Strait of Hormuz. Iranian Foreign Minister Abbas Araghchi said these requirements were longstanding and that Washington would need to make concessions. However, Trump said talks could resume this week. Oil markets have remained volatile as hopes for progress repeatedly give way to renewed uncertainty during the conflict’s eighth month. Regional tensions also persisted, with Saudi-led coalition forces reporting the interception of Houthi drones heading toward Riyadh and a missile aimed at Khamis Mushait, while alerts were issued around Abha and Jazan, where Aramco facilities are located.

Germany’s 10-year Bund yield climbed above 3.6%, touching its highest level since June 2009, as elevated energy prices fuel concerns over renewed inflationary pressure and hawkish central-bank signals push up rate expectations. Brent crude rose above $106 a barrel amid fading optimism over progress in US-Iran talks. Iran said it would not soften its conditions for reopening the Strait of Hormuz after President Trump rejected its proposal. Speaking to Axios, Trump said Iran had “overplayed its hand” and that he expected negotiations to resume this week. Money markets are now pricing in roughly 100 basis points of ECB rate hikes by late 2027. Investors in the US and UK have similarly increased bets on further monetary tightening following hawkish comments from policymakers and data pointing to resilient growth. Meanwhile, concerns over debt affordability in heavily indebted economies, particularly France and Italy, have added to pressure on European bonds ahead of elections next year.

China’s industrial profits rose 15.7% year-on-year to CNY 5.27 trillion in the first eight months of 2026, slowing from a 17.6% gain in the January-July period. The latest result reflected continued strength in high-tech and AI-related manufacturing, although subdued domestic demand weighed on profitability in some industries. Profits at state-owned enterprises increased 10.3% to CNY 1.67 trillion, while those at joint-stock companies rose 20.4% to CNY 4.07 trillion. Private firms posted a 10.4% gain to CNY 1.32 trillion. By sector, mining remained the main driver, with profits surging 35.1%, followed by manufacturing (17.4%), while utilities fell 12.0%. By industry, the strongest gains were seen in computers and communications (110%), non-ferrous metal smelting and rolling (82.9%), coal mining (51.6%), and chemicals (51.0%). In August alone, industrial profits grew 4.2% from the prior year, sharply easing from an 11.2% rise in July and marking the softest pace since November 2025.