This week’s weekly market sentiment shifted fast. Fed Chair Kevin Warsh used his first Jackson Hole speech to warn that inflation has not meaningfully improved, putting a September rate hike firmly on the table. The dollar surged. Gold dropped 3% in a single session. Bond yields climbed across the curve.
Strength Dashboard
| Symbol | Rating | Reason |
|---|---|---|
| Currencies | ||
| GBP | Weak Bullish | Holding firm on BoE hawkish split. |
| USD | Strong Bullish | Warsh speech lifted DXY above 99. |
| EUR | Weak Bullish | ECB hike expectations rising on inflation. |
| JPY | Strong Bearish | Rate gap widening, yen near 160. |
| AUD | Neutral | RBA paused, caught between USD and China. |
| NZD | Weak Bearish | RBNZ dovish tilt, kiwi underperforming. |
| CHF | Weak Bullish | Safe-haven demand supporting the franc. |
| DXY | Strong Bullish | Rebounded from 98.8 to above 99. |
| Indices | ||
| S&P 500 | Weak Bullish | Up 0.5% on week, near all-time high. |
| Dow Jones | Weak Bullish | First winning week in three |
| Commodities | ||
| Gold (XAU) | Weak Bearish | Fell 3% Friday on hawkish Warsh. |
| Oil (Brent) | Weak Bearish | Down 5% as Hormuz supply fears eased. |
Geopolitical Spotlight
Two events dominated this week. First, Fed Chair Kevin Warsh delivered his first Jackson Hole speech, warning that inflation has not meaningfully improved and the Fed may still have “work to do.” Bond markets reacted immediately.
The 2-year Treasury yield jumped from 4.22% to 4.30%, and the probability of a September rate hike climbed above 65%. This was the clearest hawkish signal Warsh has given since replacing Powell in May.
Second, the Iran and Strait of Hormuz situation evolved again. Iran and Oman agreed on a revenue-sharing framework for the strait, a small step forward. But Tehran stressed this does not mean an immediate reopening, and the Trump administration said it has no interest in reviving the terms of the collapsed June deal. Persian Gulf oil exports have recovered to roughly 15 to 16 million barrels per day, still 7 to 8 million below pre-conflict levels. The IRGC continues to claim full control of the strait.
The Fed meets on 16 to 17 September, and this week’s Jackson Hole speech makes that meeting a live event. If the August jobs report (5 September) comes in strong, a rate hike becomes the base case. The Iran situation remains a slow-burn risk. Watch for any US escalation on secondary sanctions, which could disrupt oil markets again.
Forex Markets
The dollar was the story this week. DXY rebounded from a three-month low of 98.8 to close above 99, powered by Warsh’s hawkish Jackson Hole speech and a hotter-than-expected PCE reading (0.2% month-on-month versus 0.1% forecast, annual at 3.7%).
EUR/USD dropped to 1.1583 by Friday, its lowest since 19 August, despite rising eurozone inflation. France’s harmonised CPI rose to 2.7%, and Spain’s hit 4.5%, fuelling ECB hike bets. Markets now price the ECB deposit rate at 2.80% by March.
GBP/USD slipped from a 1.3655 weekly high to around 1.3537. The BoE held at 3.75% in July with a 6-3 split (three members wanted a hike), keeping sterling relatively supported. USD/JPY pushed above 159, extending yen weakness.
The BOJ rate sits near zero, and the yield gap with the US keeps widening. AUD/USD held around 0.72, steady but lacking direction. NZD/USD slid to 0.5914, the weakest major this week on dovish RBNZ signals. USD/CHF traded near 0.809, with the franc benefiting from safe-haven flows linked to the Iran conflict.
Currencies to watch
USD (DXY). The dollar has momentum. If the September jobs data reinforces the hike narrative, DXY could push toward the 100 level. Watch whether 99.5 holds as support.
JPY. USD/JPY near 160 is politically sensitive. Japan intervened near these levels before. Any sharp move above 160 could trigger MOF action. This is the pair to watch for sudden reversals.
EUR. ECB hike expectations are building. If September eurozone inflation stays elevated, EUR could find a bid against non-dollar pairs even as EUR/USD weakens.
The next two weeks are packed. US non-farm payrolls on 5 September will shape Fed expectations heading into the 16 to 17 September meeting. The ECB meets on 10 September and is widely expected to hike to 2.50%. GBP traders should watch UK CPI data closely before the BoE’s 17 September decision. USD/JPY above 160 remains the key breakout level.
Indices
US equities posted a solid week despite a soft Friday. The S&P 500 gained 0.5% to close at 7,711.76, near its all-time high set earlier in August. The Nasdaq rose 0.9% to 26,402, and the Dow climbed 0.5% to 53,560, its first winning week in three. ES futures settled around 7,722.
Nvidia was the catalyst. The chipmaker beat earnings estimates (EPS $2.22 versus $2.09 expected) and guided fiscal Q3 revenue well above consensus, sending shares up 8.7% on Thursday. But the broader semiconductor space was mixed. Marvell fell 10.3% and Applied Materials lost 5% on the week, showing the rally was narrow. Friday saw a pullback after Warsh’s hawkish tone, with the 10-year Treasury yield rising to 4.73% and putting pressure on growth names. Risk sentiment is cautious: up on earnings, nervous on rates.
The S&P 500 is close to all-time highs, but rising bond yields and rate hike fears are creating a ceiling. September has historically been the weakest month for US equities. Watch the August jobs report on 5 September. A strong number could push yields higher and cap equities. Tech earnings season is winding down, removing a key support.
Gold & Oil
Gold fell sharply, dropping around 3% on Friday alone after Warsh’s hawkish comments. XAU/USD traded around $4,455 to $4,576, pulling back from $4,650 earlier in the week. The 200-day moving average near $4,527 was briefly tested. A stronger dollar, rising Treasury yields, and increased rate hike expectations all pressured the metal. Gold had risen for three consecutive weeks before this reversal.
Brent crude fell roughly 5% on the week, settling near $88 to $89 per barrel. The decline came as markets repriced the Strait of Hormuz risk. Goldman Sachs estimated that Persian Gulf oil exports have climbed to 15 to 16 million barrels per day, reducing the supply panic. The Iran-Oman revenue-sharing agreement added to the easing of tensions, though Tehran’s insistence that the strait will not reopen until sanctions are lifted keeps a floor under prices. WTI traded around $83.
Gold is at a crossroads. If the Fed hikes in September, expect a test of the $4,300 support zone. If inflation data softens, gold could bounce back above $4,600 quickly. For oil, the Iran-Oman deal is the key variable. Any concrete progress on reopening Hormuz could send Brent below $85. A breakdown in talks would push it back toward $95.
Week in Review
- Fed Chair Warsh delivered hawkish Jackson Hole speech, opening the door to rate hikes.
- US PCE inflation came in hotter than expected at 3.7% annual.
- Nvidia beat earnings and guided revenue sharply higher, sending shares up 8.7%.
- Brent crude fell 5% as Hormuz supply fears eased on Iran-Oman deal progress.
- Gold dropped 3% on Friday as the dollar surged on rate hike expectations.
- US ISM Manufacturing PMI (1 September).
- US JOLTS job openings (2 September).
- US ADP employment data (3 September).
- US non-farm payrolls and unemployment (5 September).
- Eurozone CPI flash estimate (1 September).
