Risk appetite came back this week even as the dollar stayed firm. Our weekly market sentiment read holds a firm but slower dollar, with the US Dollar Index (DXY) up +0.3% to 102.23 for a fourth straight weekly gain.
US equities did the talking. The S&P 500 set a record midweek and all three major indices closed higher, a risk-on turn that came as Treasury yields stabilised late in the week.
We flagged the dollar’s run in last week’s market report, and it firmed again at a slower pace.
Weekly Market Sentiment Dashboard
| Symbol | Rating | Reason |
|---|---|---|
| Currencies | ||
| GBP | ⚪ ➡️ Neutral | Held its ground as the dollar firmed. |
| USD | 🟡 ⬆️ Weak Bullish | Fourth straight gain, but the pace slowed. |
| EUR | 🟠 ⬇️ Weak Bearish | Fifth weekly fall to a 17-month low. |
| JPY | 🟠 ⬇️ Weak Bearish | Softened toward the 160 intervention zone. |
| AUD | 🟡 ⬆️ Weak Bullish | Firmed even as the dollar broadly gained. |
| NZD | ⚪ ➡️ Neutral | Little changed on the week. |
| CHF | ⚪ ➡️ Neutral | Franc held near flat against the dollar. |
| DXY | 🟡 ⬆️ Weak Bullish | Fourth straight gain on high yields. |
| Indices | ||
| Nasdaq | 🟡 ⬆️ Weak Bullish | Fourth straight weekly gain near records. |
| ES | 🟡 ⬆️ Weak Bullish | S&P future rose with the cash index. |
| S&P 500 | 🟡 ⬆️ Weak Bullish | Set a record midweek before easing. |
| Dow Jones | 🟡 ⬆️ Weak Bullish | Biggest weekly gain since August. |
| Commodities | ||
| Gold (XAU) | 🟡 ⬆️ Weak Bullish | Recovered after two weekly falls. |
| Oil (Brent) | 🟡 ⬆️ Weak Bullish | Firmed on Strait of Hormuz supply risk. |
Geopolitical Spotlight
The week’s biggest geopolitical story stayed in the Middle East. Attacks on oil tankers near the Strait of Hormuz picked up, and the supply risk kept Brent crude above $100 a barrel.
Traffic through the strait thinned as the week went on. That put a floor under oil even while barrels elsewhere stayed ample.
OPEC+ added to the steady tone. The group agreed on 4 October to hold November output targets unchanged, pointing to the supply disruptions already in the market.
The desk at City Traders Imperium is watching the Strait of Hormuz for the next signal on energy.
The Strait of Hormuz stays the swing factor for oil into the next two weeks. Fresh disruption there would lift Brent fast and rebuild an energy risk premium.
A calmer stretch would let ample supply pull prices back. Watch Brent at $100, the level that has held the recent floor.
What would change our view: a clear reopening of tanker traffic through the Strait of Hormuz that strips the supply premium out of oil.
Sources: CNBC, Bloomberg.
Forex Markets
The dollar held firm but climbed at a slower pace. DXY rose +0.3% to 102.23, a fourth straight weekly gain, though the US 10-year Treasury yield eased to about 5.24% by Friday after an early-week run to multi-decade highs.
The September FOMC minutes, released on 7 October, kept the hawkish tone. Most officials still expect another rate increase by year-end, though traders now price little chance of a move this month.
EUR/USD fell -0.5% to 1.1197, the weakest major, touching a 17-month low at 1.1161. The yield gap did the damage while the European Central Bank stayed quiet.
USD/JPY rose +0.3% to 158.27, leaving the yen soft near the 160 zone that has drawn official attention before. USD/CHF held at 0.8300, with the franc near flat.
AUD/USD firmed +0.4% to 0.6979, bucking the stronger dollar ahead of Australian jobs data. NZD/USD was little changed at 0.5609, and GBP/USD eased only -0.1% to 1.3224 as sterling outperformed the softer majors.
Currencies to Watch
EUR/USD. The euro has fallen for five straight weeks and sits at a 17-month low.
US CPI lands on Wednesday. A hot print would press the pair toward 1.1100, while a soft one could ease the pressure.
USD/JPY. The pair sits at 158.27, closing in on the 160 line.
Japanese officials have acted near that level before. Watch for any verbal pushback if the yen slips further.
AUD/USD. The Aussie rose against the firm dollar this week.
Australian employment data is due Thursday. A strong figure would back the move, while a weak one could hand the dollar the edge again.
The dollar keeps the upper hand while yields sit at multi-decade highs, but the slower weekly gain hints the easy part of the run is behind it. The euro looks the most exposed if US inflation stays firm, while the pound and the Aussie have shown more resistance.
Wednesday’s US CPI is the swing point for the whole complex. Watch 102.50 on DXY, the 18-month high the index is pressing against.
What would change our view: a soft US CPI on Wednesday that pulls Treasury yields down and takes the yield support out from under the dollar.
Sources: Trading Economics, FXStreet, Federal Reserve.
Indices
US equities pushed higher into earnings season. Buyers looked through multi-decade-high yields and leaned on strong tech, which carried the broad market.
The S&P 500 rose +1.1% to 7,812 and set a record high midweek before easing. The S&P 500 E-mini future (ES) settled near 7,860.
The Nasdaq gained +0.6% to 27,366, its fourth straight weekly advance as big tech held firm. The Dow Jones added +0.9% to 51,655, its biggest weekly gain since August.
The risk-on tone firmed as yields stabilised after their early-week spike. For now, earnings optimism is winning out over the caution in the bond market.
Yields still set the ceiling for stocks over the next two weeks. A hot CPI on Wednesday would test the risk-on mood, while early earnings could keep tech in the lead.
The record run leaves the market priced for good news. Watch the 10-year yield near 5.30%, the level that would start to bite on valuations.
What would change our view: a renewed spike in the 10-year yield back above 5.40% that forces a repricing of the highest-valued parts of the market.
Sources: Yahoo Finance, Investing.com.
Gold and Oil
Gold steadied this week. It rose +1.3% to $4,194, clawing back part of the two prior weekly falls as the dollar’s climb slowed.
This reads as a pause in the pullback, not a fresh breakout. High real yields still cap the metal, and the safe-haven bid is doing the lifting.
Oil firmed on supply risk. Brent rose +2.1% to $104.43 as Strait of Hormuz disruption met OPEC+ output held steady for November.
The link back to the dollar runs through yields. A firmer dollar and high yields usually weigh on gold, so its recovery leaned on the geopolitical bid rather than rates.
Yields, the dollar and the Middle East drive both markets into next week. If US CPI cools yields, gold has room to extend its bounce.
Oil leans on the supply story more than demand right now. Watch gold at $4,200, the level that decides whether this is a base or a pause.
What would change our view: a hot US CPI that lifts real yields further and pulls gold back below $4,100.
Sources: Investing.com, CNBC.
What happened this week
- The DXY posted a fourth straight weekly gain, up +0.3% to 102.23.
- The US 10-year Treasury yield eased to about 5.24% by Friday after an early-week spike to multi-decade highs.
- The S&P 500 set a record midweek and closed +1.1% at 7,812.
- Gold recovered +1.3% to $4,194 after two weekly falls.
- Brent held above $100 at $104.43 on Strait of Hormuz supply risk.
What to watch next week
- Wednesday 14 October, 12:30 GMT (13:30 London): US CPI, headline seen at +0.6% m/m.
- Thursday 15 October, 00:30 GMT (01:30 London): Australia employment, seen at +20.0K.
- Thursday 15 October, 06:00 GMT (07:00 London): UK GDP, seen at -0.1% m/m.
- Thursday 15 October, 12:30 GMT (13:30 London): US retail sales, seen at +0.3% m/m.
- Friday 16 October, 03:30 GMT (04:30 London): Fed Chair Warsh speaks.
For informational purposes only. Not financial advice.
