Weekly market sentiment this week leans dollar-bullish, with the yen under severe pressure and risk assets mixed across indices and commodities.
Strength Dashboard
| Symbol | Rating | Reason |
|---|---|---|
| Currencies | ||
| GBP | Strong Bullish | Pound near 2-week highs, +1% monthly. |
| USD | Weak Bearish | DXY worst weekly drop in 3 months. |
| EUR | Weak Bullish | Strong Eurozone GDP lifts single currency. |
| JPY | Strong Bullish | Historic US-Japan intervention fuels rally. |
| AUD | Neutral | Steady near 0.70, waiting on RBA cues. |
| NZD | Neutral | Rangebound near 0.59, no clear catalyst. |
| CHF | Weak Bullish | Safe-haven demand from Iran escalation. |
| DXY | Weak Bearish | Fell to 99.78, weakest in six weeks. |
| Indices | ||
| S&P 500 | Neutral | Flat for July despite Friday’s rally. |
| Dow Jones | Weak Bullish | Fourth straight monthly gain, +0.3%. |
| Commodities | ||
| Gold (XAU) | Neutral | Six-week range around $4,045-4,112. |
| Oil (Brent) | Strong Bullish | Brent surges 22%+ in July on Iran war. |
Geopolitical Spotlight
The US-Iran conflict dominated markets this week. Fresh US military strikes on Iranian targets came after Tehran’s attacks on US assets in the region, and hopes for a near-term ceasefire collapsed entirely. Tanker traffic through the Strait of Hormuz faltered, with reports of Revolutionary Guards halting vessels and Houthi militants blockading Red Sea routes. Saudi Arabia responded by hosting talks with 43 countries on forming a maritime coalition to protect shipping.
Separately, the first coordinated US-Japan currency intervention since 2011 made headlines. The US Treasury bought yen through the New York Fed on Friday, joining Japan’s Ministry of Finance in pushing USD/JPY from 164 down to 157. Finance Minister Katayama is expected to formally announce the joint action on Monday. This is a seismic development for FX markets and a signal that both governments view excessive yen weakness as a shared problem.
All eyes on whether the Hormuz shipping corridor stays open. Trump claimed a deal is close, but Tehran has not confirmed. If tanker disruptions worsen, expect oil above $100 and renewed inflation fears. The US-Japan intervention means yen shorts carry significant two-way risk heading into Monday’s open. Watch for a formal joint statement early in the week.
Forex Markets
USD: The dollar had its worst week in three months. DXY fell to 99.78, down roughly 1.5% on the week. The Fed held rates at 3.50%-3.75% with three dissents wanting a hike, but Chair Warsh gave no forward guidance. Markets now price a September hike at just 55%, down from 80% before the decision.
GBP: Sterling climbed to around $1.345, its best monthly performance since April (+1%). The BoE held at 3.75% in a 6-3 vote. Three members wanted a hike. UK inflation at 2.6% is above target, and the BoE projects it could peak at 3.2% in Q4.
EUR: The euro rallied above $1.15 after Eurozone Q2 GDP surprised at 0.4% (forecast: 0.2%) and inflation rose to 2.9%. Markets now fully price the ECB deposit rate reaching 2.75% by early 2027.
JPY: The week’s biggest mover. USD/JPY crashed from 164 to 157 after Japan and the US conducted coordinated yen-buying. The BOJ held at 1% but signalled further tightening is coming.
AUD: Steady around 0.70. Australia printed June CPI earlier in the week; the RBA is in watch-and-wait mode.
NZD: Rangebound near 0.59. No major domestic catalysts. The kiwi tracked broader risk sentiment without standing out.
CHF: The franc strengthened to around 0.807 against the dollar as safe-haven flows picked up on Middle East escalation and rising bond yields.
Currencies to watch
JPY: The coordinated intervention has changed the game. Any pullback toward 160 could trigger fresh official buying. Yen crosses are the most two-sided trade in FX right now.
GBP: Sterling is quietly outperforming. The BoE’s hawkish hold and rising UK inflation expectations give the pound a carry advantage. GBP/USD above 1.35 opens the door to test 1.36.
EUR: The strong GDP and inflation data create a clear path toward an ECB hike in September. EUR/USD is testing the upper end of its recent range near 1.15.
Friday’s NFP report is the biggest data event for FX this week. A strong payrolls number could revive September hike bets for the Fed and lift the dollar. A weak number would deepen the post-FOMC dollar sell-off. USD/JPY is the pair to watch: traders should expect wider spreads and sharp moves as markets test the credibility of the US-Japan intervention.
Indices
US indices ended a volatile week higher. The S&P 500 rose about 1% on the week to close at 7,489.72. The Nasdaq gained 1.6%, closing at 25,373.85. The Dow added roughly 1% to finish at 52,485.03. Amazon surged 15% on strong cloud earnings, Alphabet rose 7%, and Microsoft rallied earlier in the week. Apple fell 7% after flagging chip shortages and a weak revenue forecast.
Despite the weekly gains, July told a different story. The Nasdaq dropped 3.2% for the month, its worst monthly showing since early 2025. The S&P 500 slipped 0.1%. Only the Dow managed a positive July, up 0.3% for its fourth straight monthly gain.
Bond yields surged. The 30-year Treasury hit its highest since 2007 at 5.25%. The 10-year yield topped 4.7%. Markets are losing confidence that the Fed will contain inflation without hiking, and that anxiety is keeping a lid on equity valuations.
This week brings ISM manufacturing on Monday, ISM services on Wednesday, and NFP on Friday. All three will shape the September rate hike narrative. If payrolls come in strong with rising wages, expect yields to push higher and tech to struggle. The 30-year yield at 5.25% is a level that historically pressures equity multiples. Watch the 10-year around 4.70% as the key threshold for broader risk sentiment.
Gold & Oil
Gold (XAU/USD): Gold spent a sixth consecutive week trapped in a tight range between $4,045 and $4,112. It closed Friday near $4,045. The weaker dollar provided some support, but rising Treasury yields and the potential for a Fed hike are capping upside. Gold hit its all-time high of $5,602 in January and has been in a correction ever since. The 50-day moving average sits at $4,186, well above the current price, confirming the broader downtrend.
Oil (Brent): Brent surged more than 22% in July, its strongest monthly gain since March, closing around $88 per barrel. WTI finished near $85. The driver was entirely geopolitical: renewed US strikes on Iran, Houthi blockades in the Red Sea, Revolutionary Guards halting tankers in the Strait of Hormuz, and a Ukrainian strike on Russia’s Volgograd refinery. US crude inventories also declined, adding to supply tightness. OPEC+ added 188,000 barrels per day for September.
Gold needs a catalyst to break out of its six-week range. A weak NFP could send it toward $4,112 resistance. A strong one likely pushes it back toward $3,960 support. For oil, everything depends on the Hormuz situation. If Trump’s claim of a deal proves hollow and tanker disruptions continue, Brent could retest $100. The OPEC+ supply increase for September is modest and unlikely to offset conflict-driven supply fears.
Week in Review
- Fed held at 3.50%-3.75%, three members dissented for a hike.
- BoE held at 3.75% in a 6-3 vote, UK inflation at 2.6%.
- BOJ held at 1%, US and Japan launched joint yen intervention.
- Brent crude surged 22% in July on US-Iran escalation.
- Amazon +15%, Apple -7%, 30-year yield hit 5.25%.
- ISM manufacturing PMI (Monday, August 3).
- JOLTS job openings (Tuesday, August 4).
- ADP private payrolls, ISM services PMI (Wednesday, August 5).
- Jobless claims (Thursday, August 6).
- Nonfarm payrolls and unemployment rate (Friday, August 7).
