This week’s Weekly Market Sentiment is shaped by soft US inflation, a sharp retail sales drop and a deadlocked Strait of Hormuz. The dollar is sliding, gold is surging and the S&P 500 just hit all-time highs. Use the dashboard below to spot the strongest and weakest currencies, then scroll down for the setups worth watching this week.
Strength Dashboard
| Symbol | Rating | Reason |
|---|---|---|
| Currencies | ||
| GBP | Strong bullish | BoE hawkish, near 2026 highs. |
| USD | Weak bearish | Soft CPI and PPI weigh on dollar. |
| EUR | Weak bullish | ECB hike bets support the euro. |
| JPY | Strong bearish | Yen sliding despite intervention. |
| AUD | Neutral | RBA hold leaves AUD directionless. |
| NZD | Weak bullish | RBNZ hawkish, Sept hike priced in. |
| CHF | Neutral | Safe-haven demand fading on talks. |
| DXY | Weak bearish | Sliding below 100 on data misses. |
| Indices | ||
| S&P 500 | Strong bullish | Record close above 7,800. |
| Dow Jones | Neutral | Lagged peers, down 0.6% weekly. |
| Commodities | ||
| Gold (XAU) | Strong bullish | Rallied to $4,450 on USD weakness. |
| Oil (Brent) | Strong bullish | Up 5% weekly on Hormuz deadlock. |
Geopolitical Spotlight
The Strait of Hormuz remained the dominant market story this week. Despite weeks of talks between Iran and Oman, no agreement has been reached to fully reopen the waterway. Traffic through the strait remains well below pre-conflict levels, and the International Energy Agency warned that global oil stockpiles are being drawn down at the fastest pace in five years.
The US escalated economic pressure, with Treasury Secretary Scott Bessent announcing unprecedented new measures against Iran while maintaining the naval blockade of Iranian ports. Houthi militants also struck Saudi Arabia’s Jazan refinery, adding another layer of risk to Middle Eastern energy flows. Oil surged 5% on the week as a result.
Meanwhile, US retail sales fell 0.6% in July, the sharpest drop in over a year, and the University of Michigan’s preliminary August consumer sentiment reading slumped to 51. Inflation expectations ticked up to 4.3%. The consumer is starting to feel the squeeze.
The Hormuz stalemate is the single biggest wildcard for markets over the next two weeks. Any breakthrough deal could send oil sharply lower and ease inflation pressure globally. But a further escalation, or another attack on commercial shipping, would push Brent toward $95 and reignite rate hike fears. Watch for any scheduled US or Iran announcements on the strait this week.
Forex Markets
The US dollar was the week’s biggest loser. The DXY dropped below 99.60 on Friday after softer CPI (+0.1% m/m, 3.4% y/y), flat PPI, a retail sales miss (-0.6%) and a consumer sentiment plunge. Traders cut September rate hike odds from ~52% to ~36%. The dollar is under real pressure.
GBP pushed toward 1.3530 against the dollar, near its strongest levels of 2026. The Bank of England’s hawkish hold and relatively firm UK data continue to support sterling.
EUR climbed above 1.1570, its highest in two months, as Eurozone Q2 GDP grew 0.4% and the ECB is widely expected to hike again in September.
JPY remains weak around 159.30 despite joint US-Japan intervention in late July. Wide rate differentials keep pulling the yen lower.
AUD drifted near 0.7060 after the RBA held at 4.35% for a second meeting; markets now see a lower chance of further hikes this year.
NZD rallied to 0.5890, outperforming most peers, as the RBNZ’s hawkish stance keeps it supported.
CHF held steady with USD/CHF around 0.8130; the franc’s safe-haven bid has cooled slightly as Hormuz talks continue.
Currencies to watch
GBP/USD: Cable is pressing against its 2026 highs. If DXY stays below 99.50, the 1.3560 resistance level comes into play. The BoE’s hawkish bias gives the pound a structural edge.
EUR/USD: The euro has momentum, supported by ECB hike expectations for September 10. A clean break above 1.1600 could open the door toward 1.1750.
USD/JPY: The 160.00 level is being watched closely. The BoJ is expected to discuss rate hikes in September, but the yen’s weakness remains persistent. Any fresh intervention signals could trigger a sharp move.
Wednesday’s FOMC minutes from the July meeting will be closely watched for any shift in tone. If the minutes reveal a committee leaning away from September tightening, the dollar could sell off further. Flash PMIs on Friday will test whether the Eurozone and UK economies are holding up. Watch EUR/USD for a potential break above 1.1600 and USD/JPY around 160.00 for intervention risk.
Indices
It was a record-setting week for the S&P 500. The index hit an intraday all-time high of 7,816.70 on Thursday, closing that day at 7,799. For the week, the S&P 500 gained 0.4%, marking its third consecutive weekly advance. The Nasdaq edged up 0.1%, while the Dow lagged, dropping 0.6%.
The main drivers were the soft inflation readings. Both CPI and PPI came in below expectations, which eased fears of a September rate hike and gave equities room to run. Earnings season also helped: roughly 85% of S&P 500 companies reporting so far have beaten profit estimates. However, Friday’s retail sales miss (-0.6%) and the consumer sentiment drop to 51 injected some caution, pulling all three indices lower on the final trading day.
Valuations are still reasonable at around 20x forward earnings. Year to date, the S&P 500 is up 13.7%, the Nasdaq 15%, and the Russell 2000 has surged 23.6%.
The FOMC minutes on Wednesday could set the tone for the week. If policymakers sound cautious on further tightening, expect another push toward 7,850 on the S&P 500. But if the minutes lean hawkish, a pullback to the 7,700 area is likely. Walmart and Home Depot earnings are also due this week and will give a direct read on the US consumer.
Gold & Oil
Gold had its strongest week since January, rallying from around $4,100 to touch $4,450 before settling near $4,377. The move was fuelled by dollar weakness after the soft CPI and PPI prints, combined with falling retail sales and a consumer sentiment slump. Lower rate hike odds reduce the opportunity cost of holding gold. The metal remains about 22% below its January all-time high of $5,602.
Brent crude rose above $88, gaining roughly 5% on the week. The Strait of Hormuz standoff continues to underpin prices, with the IEA warning of the widest global supply deficit in five years. US Treasury Secretary Bessent said Washington would impose unprecedented new economic measures on Iran while maintaining its naval blockade. Houthi attacks on Saudi infrastructure added further supply-side worry. US inventories remain below the five-year low, offering no cushion.
Gold’s break above $4,300 was significant. If the dollar stays weak, a test of $4,500 is realistic within two weeks. The 200-day SMA near $4,504 is the key resistance to watch. For oil, $90 Brent is the next psychological level. Any positive Hormuz headlines could trigger a sharp pullback in crude, but without a deal, prices are likely to grind higher. The EIA’s Short-Term Energy Outlook next month will update supply deficit forecasts.
Week in Review
- S&P 500 hit all-time high above 7,800.
- US CPI eased to 3.4% y/y, PPI flat in July.
- Retail sales fell 0.6%, biggest drop in a year.
- Brent crude surged 5% on Hormuz deadlock.
- Gold rallied to $4,450 on dollar weakness
- FOMC minutes from July meeting (Wed, Aug 19).
- RBNZ rate decision (Wed, Aug 20).
- Flash PMIs for Eurozone, UK and US (Fri, Aug 22).
- Walmart and Home Depot earnings reports.
- Strait of Hormuz diplomatic developments.
