The dollar ran the board again this week. Our weekly market sentiment read holds a firm dollar, with the US Dollar Index (DXY) up +0.9% to 101.93 for a third straight weekly gain.
Treasury yields did the heavy lifting. The 10-year reached 5.28%, its highest since 2002, and the widening rate gap pulled money toward the dollar.
We flagged the dollar’s run in last week’s market report, and it extended rather than faded.
Weekly Market Sentiment Dashboard
| Symbol | Rating | Reason |
|---|---|---|
| Currencies | ||
| GBP | ⚪ ➡️ Neutral | Held firm as the dollar broadly gained. |
| USD | 🟢 ⬆️⬆️ Strong Bullish | Third straight weekly gain on high yields. |
| EUR | 🟠 ⬇️ Weak Bearish | The week’s weakest major as yields bit. |
| JPY | ⚪ ➡️ Neutral | Little changed before Ueda speaks Tuesday. |
| AUD | 🟠 ⬇️ Weak Bearish | Fell despite the RBA hike to 4.60%. |
| NZD | 🟠 ⬇️ Weak Bearish | Slid alongside the other risk currencies. |
| CHF | ⚪ ➡️ Neutral | Franc held flat against a firm dollar. |
| DXY | 🟢 ⬆️⬆️ Strong Bullish | Third straight weekly gain on high yields. |
| Indices | ||
| Nasdaq | 🟡 ⬆️ Weak Bullish | Friday tech surge lifted it to records. |
| ES | ⚪ ➡️ Neutral | Index future near flat on the week. |
| S&P 500 | ⚪ ➡️ Neutral | Flat as Friday erased midweek losses. |
| Dow Jones | 🟠 ⬇️ Weak Bearish | Lagged as yields hit cyclical names. |
| Commodities | ||
| Gold (XAU) | 🟠 ⬇️ Weak Bearish | Second weekly fall on surging yields. |
| Oil (Brent) | ⚪ ➡️ Neutral | Held above key support on Hormuz risk. |
Forex Markets
The dollar’s gains were not evenly spread. It climbed hardest against the euro and the commodity currencies, while the pound, yen and franc held their ground.
EUR/USD fell -1.1% to 1.1252, the weakest major, with the European Central Bank quiet and the yield gap doing the damage.
AUD/USD lost -1.0% to 0.6955 even though the Reserve Bank of Australia raised its cash rate to 4.60% on Monday 29 September. Softer Australian inflation has since cooled bets on a further hike, and the strong dollar did the rest.
NZD/USD slipped -0.9% to 0.5614 alongside its Australian neighbour. The havens were steadier, as USD/JPY sat little changed at 157.83 and USD/CHF held at 0.8288.
GBP/USD ended near 1.3242, barely moved on the week as sterling outperformed the softer majors. DXY closed at 101.93, a third straight weekly gain.
Currencies to Watch
AUD/USD. The Aussie fell despite the RBA’s hike, with softer Australian inflation now cooling the case for another move.
Watch 0.6900. It has capped the slide so far.
USD/JPY. The pair sits at 157.83, still below the 160 zone that has drawn official attention before.
Governor Ueda speaks on Tuesday. Traders will read him for any hint on the Bank of Japan’s next step.
EUR/USD. The euro was the week’s clear loser at 1.1252.
With the ECB quiet, the pair takes its cue from US yields and Wednesday’s FOMC minutes. Watch 1.1200, the next support if the dollar presses on.
The dollar keeps the upper hand while yields sit at multi-decade highs and the data gap persists. The euro and the antipodeans look the most exposed if US rate expectations stay firm.
The pound, yen and franc have more room to resist. Watch the 102 mark on DXY, the line that has held the trend.
Indices
US equities split again. The gap ran between big tech, which held up well, and the rate-sensitive corners of the market that buckled under the weight of multi-decade-high yields.
The Nasdaq edged up +0.5% to 27,191, carried by a strong Friday. Tesla jumped on a third-quarter delivery beat and Nvidia closed at a record, which pulled the index back to the highs.
The S&P 500 finished near flat at 7,723, down -0.3% on the week, as Friday’s rally clawed back midweek losses. The S&P 500 E-mini future (ES) settled at 7,777.
The Dow Jones lagged, off -1.3% to 51,176, as high yields weighed on cyclical and value names. With official jobs data missing, buyers favoured growth and stayed cautious elsewhere.
Yields still set the ceiling for stocks over the next two weeks. The FOMC minutes on Wednesday are the main event, and a hawkish read would pressure the broad market while tech holds up better.
A dovish surprise would give the laggards room. Watch the 10-year yield near 5.30%, the level steering the whole board.
Gold and Oil
Gold had another hard week. It fell -3.3% to $4,140, its second straight weekly loss, as the relentless climb in Treasury yields and a firm dollar pulled hard at the safe-haven bid.
This reads as a pullback, not a turn. The metal still sits far above where it began the year, and the Middle East risk keep a floor beneath it.
Oil held its ground. Brent finished at $102.25, little changed on a comparable basis, as Strait of Hormuz supply risk balanced ample barrels elsewhere.
US crude traded softer than Brent as reserve releases added barrels at home. The connection back to rates is direct, because cheaper energy eases some inflation while high yields keep gold on the back foot.
Yields and the dollar drive both metals and crude into next week. If a funding deal steadies yields, gold could find its feet near current levels.
A fresh Hormuz scare would lift Brent and rebuild the risk premium fast. Watch gold at $4,100, the level that decides whether this is a pause or a deeper slide.
What happened this week
- The dollar posted a third straight weekly gain, with DXY up +0.9% to 101.93.
- The US 10-year Treasury yield reached 5.28%, its highest since 2002.
- Gold fell -3.3% to $4,140 and Brent held at $102.25 near Strait of Hormuz supply risk.
- The Nasdaq edged up +0.5% to records while the Dow fell -1.3%.
What to watch next week
- Monday 5 October, 14:00 GMT (15:00 London): US ISM services PMI, seen at 55.1.
- Tuesday 6 October, 06:35 GMT (07:35 London): BoJ Governor Ueda speaks.
- Wednesday 7 October, 18:00 GMT (19:00 London): FOMC meeting minutes, read for hike appetite.
- Thursday 8 October, 12:30 GMT (13:30 London): US weekly jobless claims, seen at 200K.
- Friday 9 October, 14:00 GMT (15:00 London): US UoM consumer sentiment, seen at 47.6.
For informational purposes only. Not financial advice.
