This week’s weekly market sentiment turned on the Federal Reserve. On Wednesday 16 September it raised its target range to 3.75% to 4.00%, the first hike since 2023, and the dot plot pointed to more.
The dollar took the lead. DXY rose +1.2% to 100.20, a fourth straight weekly gain, while EUR/USD slid to 1.1483, its weakest in seven weeks.
Two more central banks followed. The Bank of England held at 3.75% on Thursday, and the Bank of Japan hiked to 1.25% on Friday yet sounded dovish, so the yen fell hard.
We flagged this central bank run in our 14 September market report, and the results have now landed.
Weekly Market Sentiment Dashboard
| Symbol | Rating | Reason |
|---|---|---|
| Currencies | ||
| GBP | 🟠 ⬇️ Weak Bearish | Sank as the Fed outpaced the BoE. |
| USD | 🟢 ⬆️⬆️ Strong Bullish | Fed hiked, dollar index cleared 100. |
| EUR | 🟠 ⬇️ Weak Bearish | Slid to a seven-week low. |
| JPY | 🔴 ⬇️⬇️ Strong Bearish | Dovish BoJ hike sank the yen. |
| AUD | 🟠 ⬇️ Weak Bearish | Slid as risk appetite thinned. |
| NZD | 🟠 ⬇️ Weak Bearish | The week’s weakest major. |
| DXY | 🟢 ⬆️⬆️ Strong Bullish | Fourth straight weekly gain above 100. |
| Indices | ||
| Nasdaq | 🟡 ⬆️ Weak Bullish | Tech led, higher on the week. |
| S&P 500 | ⚪ ➡️ Neutral | Flat, a second soft week. |
| Dow Jones | 🟠 ⬇️ Weak Bearish | Worst week since March. |
| Commodities | ||
| Gold (XAU) | 🟡 ⬆️ Weak Bullish | First weekly gain in four. |
| Oil (Brent) | 🟠 ⬇️ Weak Bearish | Eased as the pipeline restarted. |
Geopolitical Spotlight
The Fed’s first hike since 2023 set the mood, but energy still sat underneath it. Saudi Arabia began restarting its East-West crude pipeline, and the supply fear that ran markets in early September started to drain.
Brent eased -1.2% on the week to $103.21 as those cargoes looked set to flow again. The Strait of Hormuz is still the swing factor, so any fresh disruption would put the premium straight back.
Energy is why the tightening happened. Costly oil kept inflation sticky, which gave the Fed room to raise rates and left the Bank of England staring at a 3.1% UK inflation print.
Bond markets carried the strain. The US ten-year yield sat near 4.94% by Friday, after briefly touching 5.00% for the first time since 2023.
Higher yields lifted the dollar and pressed on stocks and gold at once. Oil is still the one input that moves currencies, indices and metals together.
The pipeline restart is the story to follow over the next fortnight. If crude keeps flowing, the inflation scare cools and the pressure on central banks eases with it.
A fresh Hormuz headline would flip that fast. The desk at City Traders Imperium is watching tanker traffic through the strait for the first real signal.
Forex Markets
The dollar beat every major this week. The Fed hike and the hawkish dot plot drove DXY to 100.20, up +1.2% and its firmest in seven weeks.
EUR/USD slipped -1.0% to 1.1483, a seven-week low, with the European Central Bank quiet after last week’s hike. Sterling lost ground too.
GBP/USD fell to 1.3392 even though three of nine Bank of England members wanted a rise and UK inflation ran at 3.1%. The Fed simply outpaced them.
The yen was the clear loser. USD/JPY ran to 156.86 after the Bank of Japan lifted rates to 1.25% but gave no promise of more, so JPY fell -2.1% against the dollar.
AUD/USD eased -0.6% to 0.7121 as risk appetite thinned into the Fed. NZD/USD was weaker still, down -1.6% to 0.5724, the softest major on the board.
Currencies to Watch
USD/JPY. The pair sits at 156.86 after a dovish hike in Tokyo.
The rate gap still favours the dollar, so watch whether 158.00 comes into view or the Bank of Japan pushes back on the weak yen.
NZD/USD. The kiwi is the weakest major and trades at 0.5724.
Watch the 0.5700 area, because a clean break opens more room lower.
EUR/USD. The euro is pinned at 1.1483 with no home catalyst.
Wednesday’s eurozone flash PMIs are the first test of whether the seven-week low holds.
The dollar keeps the upper hand while the Fed leans toward another hike. That leaves the euro, the pound and the yen exposed if US data stays firm.
The yen is the one to watch after Friday’s dovish move. Watch USD/JPY around 156.00, because a break higher would test Tokyo’s patience.
Indices
US stocks split apart this week. Rising yields hit the rate-sensitive corners, while big tech held up.
The Dow Jones led the losses, down -1.7% to 51,683, its worst week since March and a third straight decline. The S&P 500 ended close to flat at 7,650, off -0.1% on the week.
The Nasdaq went the other way. It rose +0.7% to 26,523 as chip and software names drew buyers even with the ten-year yield near 4.94%.
Early in the week a call from two artificial intelligence firms for slower development had knocked sentiment. By Friday that had faded, and the tape steadied into the close.
The mood stayed cautious. With another hike in play, buyers kept picking their spots rather than chasing.
Equities hang on yields and oil over the next fortnight. A soft inflation read would let the ten-year drop back and give stocks room, while a hot one brings the next hike closer.
Watch the ten-year yield near 5.00%. That level is setting the tone for the whole equity board right now.
Gold and Oil
Gold found its feet after three losing weeks. It rose +1.0% to $4,383, its first weekly gain in four, as the haven bid from the Middle East held even against a firmer dollar.
The metal still trades below its record high, so this reads as a pause rather than a fresh run. Higher real yields remain the cap.
Oil told the other half of the story. Brent fell -1.2% to $103.21 as Saudi Arabia moved to restart its main pipeline and supply fear eased.
The floor under crude is still the Strait of Hormuz. Until that risk clears, dips get bought.
The link runs straight back to rates. Every dollar off oil eases inflation, which lets central banks breathe, which in turn shapes the dollar and gold.
Oil sets the tempo for both metals and bonds into next week. Progress on the pipeline would let Brent slip further and pull the haven bid out of gold.
A fresh disruption would rebuild the premium overnight. Watch Brent around $105.00, the line between a calmer market and another squeeze.
What happened this week
- Wednesday 16 September, 18:00 GMT (19:00 London): the Fed raised rates 25bp to 4.00%, its first hike since 2023.
- Thursday 17 September, 11:00 GMT (12:00 London): the Bank of England held at 3.75% in a 6-3 vote.
- Friday 18 September, 03:00 GMT (04:00 London): the Bank of Japan hiked to 1.25% but sounded dovish, and the yen sold off.
- The dollar index cleared 100 for the first time in about seven weeks.
- Brent eased to $103.21 as Saudi Arabia moved to restart its main pipeline.
What to watch next week
- Tuesday 22 September, 03:10 GMT (04:10 London): RBA Governor Bullock speaks, a steer for the Aussie.
- Wednesday 23 September, 08:30 GMT (09:30 London): UK flash PMIs, a read on sterling after the hold.
- Thursday 24 September, 01:30 GMT (02:30 London): Australian jobs data, employment and the unemployment rate.
- Thursday 24 September, 07:30 GMT (08:30 London): SNB decision, the policy rate seen held at 0.00%.
- Friday 25 September, 09:15 GMT (10:15 London): Bank of England Governor Bailey speaks.
For informational purposes only. Not financial advice.
