The dollar’s four-week climb ran out of road this week. Our weekly market sentiment read now leans to a softer dollar, with the US Dollar Index (DXY) down -0.4% to 101.84, its first weekly loss in five.
A hot inflation print set the early tone. US CPI jumped to 3.7% on Wednesday, yet the dollar still closed the week lower after the Fed played down an October move.
We flagged the dollar’s run in last week’s market report, and this time the momentum turned.
Weekly Market Sentiment Dashboard
| Symbol | Rating | Reason |
|---|---|---|
| Currencies | ||
| GBP | 🟡 ⬆️ Weak Bullish | Best major, ended a four-week losing run. |
| USD | 🟠 ⬇️ Weak Bearish | First weekly loss in five weeks. |
| EUR | 🟡 ⬆️ Weak Bullish | Snapped a five-week slide as dollar eased. |
| JPY | ⚪ ➡️ Neutral | Capped near 158 by intervention warnings. |
| AUD | ⚪ ➡️ Neutral | Friday rebound left it flat on week. |
| NZD | ⚪ ➡️ Neutral | Rangebound before Wednesday’s third-quarter CPI. |
| CHF | 🟡 ⬆️ Weak Bullish | Haven bid as USD/CHF broke lower. |
| DXY | 🟠 ⬇️ Weak Bearish | Pulled back from an 18-month high. |
| Indices | ||
| Nasdaq | 🟠 ⬇️ Weak Bearish | Worst week since June on tech selloff. |
| ES | 🟠 ⬇️ Weak Bearish | Fell below 7,700 with the cash index. |
| S&P 500 | 🟠 ⬇️ Weak Bearish | Down on the week as tech led lower. |
| Dow Jones | 🟡 ⬆️ Weak Bullish | Second straight weekly gain on rotation. |
| Commodities | ||
| Gold (XAU) | ⚪ ➡️ Neutral | Rangebound near $4,166, no clear trend. |
| Oil (Brent) | 🟡 ⬆️ Weak Bullish | Five-month high on Middle East supply. |
Geopolitical Spotlight
The week’s biggest geopolitical story sat in the oil market. Houthi strikes on Saudi energy sites, together with fresh attacks near the Strait of Hormuz, lifted the supply premium and pushed Brent crude to its highest close since May.
Brent settled at $109.86, up +4.9% on the week. A Saudi-led hit on a site in Sanaa drew a Houthi response against Aramco infrastructure, and traders priced the risk of wider disruption.
The move fed straight into the inflation picture. Dearer energy pushes up the headline CPI that already printed hot this week, which complicates the path for the Fed.
Gold held firm as a haven but did not break higher. The dollar, usually a refuge, could not lean on the risk-off bid this time.
The desk at City Traders Imperium is watching the Gulf for the next move in energy.
The Middle East stays the swing factor for oil into the next two weeks. Further damage to Saudi or Gulf energy sites would lift Brent fast and rebuild the risk premium.
A calmer stretch would let ample supply elsewhere pull prices back toward $100. Watch Brent at $110, the breakout level the market is now testing.
What would change our view: a clear de-escalation around Saudi and Gulf energy sites that strips the supply premium out of Brent.
Sources: Al Jazeera, World Oil, Business Today.
Forex Markets
The dollar told its story in two halves. DXY ran to an 18-month high after Wednesday’s hot CPI, then reversed to close -0.4% at 101.84, its first weekly loss in five.
The turn came from the Fed. Chair Warsh declined to pre-judge the October decision, and with other officials sounding patient, markets slashed the odds of an October hike.
Treasury yields eased to a three-week low, and that drained the dollar’s support. EUR/USD rose +0.4% to 1.1239, snapping a five-week slide, while GBP/USD led the majors, up +0.7% to 1.3328 after four losing weeks.
USD/JPY slipped to 157.95, the yen’s first weekly gain in five, as Japanese officials warned against further weakness near 158. USD/CHF fell to 0.8240 as the franc drew a haven bid.
AUD/USD ended flat at 0.6946 after a Friday bounce. NZD/USD firmed to 0.5650 ahead of Wednesday’s inflation data, leaving the commodity currencies steadier than the dollar.
Currencies to Watch
GBP/USD. Sterling snapped a four-week losing run to finish above 1.3300.
UK CPI lands on Wednesday, seen at 3.4%. A hot print would back the case for the BoE to keep rates high.
NZD/USD. The kiwi held near 0.5650 into a key risk event.
New Zealand’s third-quarter CPI is due Wednesday, seen at 0.8% on the quarter. A soft number would revive talk of rate cuts.
USD/JPY. The pair sits at 157.95, close to the zone that has drawn official pushback before.
Watch for sharper warnings from Tokyo if the yen slips back toward 158.50.
The dollar’s easy run looks over for now, but one soft week is not a trend change. The hold-or-hike debate drives the majors into the Fed’s 28 October meeting.
Sterling and the kiwi both face their own inflation tests on Wednesday that could override the dollar story. Watch DXY at 101.00, the floor that held on Friday.
What would change our view: a run of firm US data before the Fed meeting that revives October hike bets and pushes DXY back above 102.50.
Sources: Investing.com, Trading Economics, CNBC, Federal Reserve.
Indices
US stocks split along the tech line. A selloff in AI and chip names ran for eight straight sessions and dragged the Nasdaq down -4.5% to 26,140, its worst week since June.
The S&P 500 fell -1.9% to 7,659. The S&P 500 E-mini future (ES) settled near 7,704, back below the 7,700 level it had held for weeks.
The Dow Jones went the other way. It added +0.7% to 52,002 for a second straight weekly gain, as money rotated into value and defensive shares.
Hot CPI and the oil spike added to the caution. Easing Treasury yields offered the only real support into Friday’s close.
Tech sets the tone for the broad market into the next two weeks. If the chip selloff deepens, the S&P 500 and Nasdaq have more room to fall even as the Dow holds up.
A steadier bond market would give buyers the confidence to step back in. Watch the Nasdaq at 26,000, the level that would confirm a deeper pullback.
What would change our view: a bounce in the AI and chip leaders that pulls the Nasdaq back above 27,000 and restores the risk-on tone.
Sources: Yahoo Finance, Investing.com.
Gold and Oil
Gold went nowhere fast. It eased -0.7% to $4,166 and stayed boxed between roughly $4,100 and $4,240.
The softer dollar should have helped, but higher real yields earlier in the week capped the metal. The haven bid from the stock selloff did just enough to steady it.
Oil was the week’s big mover. Brent rose +4.9% to $109.86, its highest close since May, after Houthi strikes on Saudi energy sites and attacks near the Strait of Hormuz.
The supply premium, not demand, is doing the work. That keeps oil sensitive to every headline out of the Gulf.
Oil leans on the supply story more than demand into the next two weeks. Fresh disruption would push Brent through $110, while calmer headlines would let it slip back.
Gold needs either softer yields or a bigger risk scare to break its range. Watch gold at $4,240, the top of the range that has capped it.
What would change our view: a sharp drop in Treasury yields that lets gold clear $4,240 and turn the range into a base.
Sources: Bloomberg, World Oil, Business Today.
What happened this week
- Hot September CPI at 3.7% first lifted the dollar, then it reversed.
- The DXY posted its first weekly loss in five, down -0.4% to 101.84.
- The Nasdaq fell -4.5%, its worst week since June, on a tech selloff.
- The Dow Jones rose +0.7% to 52,002 as value shares led.
- Brent jumped +4.9% to $109.86 on Middle East supply risk.
What to watch next week
- Tuesday 20 October, 06:00 GMT (07:00 London): UK average earnings, seen at 3.8%.
- Wednesday 21 October, 06:00 GMT (07:00 London): UK CPI, seen at 3.4% year over year.
- Wednesday 21 October, 21:45 GMT (22:45 London): New Zealand third-quarter CPI, seen at 0.8% on the quarter.
- Friday 23 October, 13:45 GMT (14:45 London): US flash manufacturing PMI, seen at 55.5.
- Friday 23 October, 13:45 GMT (14:45 London): US flash services PMI, seen at 58.0.
For informational purposes only. Not financial advice.
