This week’s weekly market sentiment is driven by three forces: renewed US-Iran strikes near the Strait of Hormuz, a blowout August jobs report that tripled expectations, and three central bank rate decisions landing in the next eight days. Oil is surging, the yen is volatile, and rate hike odds are climbing. Here is where we see strength and weakness heading into the week.
Strength Dashboard
| Symbol | Rating | Reason |
|---|---|---|
| Currencies | ||
| GBP | Neutral | Rangebound, held up in risk-off. |
| USD | Strong Bullish | Weak Bullish |
| EUR | Neutral | Pinned near 1.16, ECB decision ahead. |
| JPY | Strong Bullish | BOJ hike bets surge, intervention risk. |
| AUD | Weak Bullish | Cleanest bullish trend in FX this week. |
| NZD | Weak Bearish | Broke lower, stuck in range. |
| CHF | Weak Bullish | Safe haven flows from Hormuz conflict. |
| DXY | Neutral | Bounced Friday but down on the week. |
| Indices | ||
| S&P 500 | Neutral | Barely positive, +0.1% for the week. |
| Dow Jones | Weak Bearish | Rate-sensitive stocks dragged it down. |
| Commodities | ||
| Gold (XAU) | Neutral | Safe haven vs. rate hike fear, going nowhere. |
| Oil (Brent) | Strong Bullish | US-Iran escalation, +9% weekly surge. |
Geopolitical Spotlight
The US and Iran exchanged strikes again this week for the first time in roughly a month. Washington targeted Iranian naval assets and oil tankers near the Strait of Hormuz, while Tehran retaliated with missiles and drones against US ships and bases in the region. VP JD Vance said the US will not negotiate until Iran stops attacking commercial shipping in the strait.
Brent crude jumped nearly 9% on the week to $96.28 as the conflict reignited supply disruption fears. Gold initially rallied on the safe haven bid but gave back gains after Friday’s strong jobs data. Equity markets fell sharply on Tuesday as news of the strikes broke, before recovering mid-week.
On Sunday, OPEC+ kept October oil output unchanged, pausing its run of production increases. The group cited ongoing uncertainty from the Hormuz conflict.
The Hormuz situation remains the single biggest wildcard for markets. Any further escalation could push Brent towards $100 and tighten the inflation picture just as the Fed and ECB are making rate decisions. Watch for US-Iran rhetoric closely this week, especially around commercial shipping routes.
Forex Markets
The US dollar (DXY) closed the week at 99.3, down about 0.7% despite a strong Friday bounce. August NFP of +162K smashed the 55K forecast, pushing rate hike odds to nearly 60% for September 15-16. But dovish comments from Fed Governor Waller mid-week capped the rally.
The yen was the week’s big mover. USD/JPY dropped over 2% on Thursday to a one-month low near 155.28 as BOJ rate hike bets surged. Markets are now pricing roughly 80% odds of a BOJ hike on September 18. Intervention speculation added fuel.
EUR/USD held a tight range between 1.1566 and 1.1641, closing at 1.1614. The euro is waiting for Thursday’s ECB decision. GBP/USD dipped to a two-week low of 1.3485 before recovering to around 1.3517.
AUD/USD was the cleanest bullish trend in FX, rising to about 0.72. NZD/USD broke lower and sat around 0.587 with no clear direction. USD/CHF stayed choppy in a 0.7948-0.8205 range, closing near 0.810.
Currencies to watch
JPY – The September 18 BOJ meeting is the biggest scheduled FX event this month. If the BOJ hikes, USD/JPY could break below 155 convincingly. If they disappoint, expect a sharp reversal higher. The yen is the most two-way risk in the G7 right now.
EUR – Thursday’s ECB decision will set the tone. A hold would likely weaken the euro. Another hike could push EUR/USD back towards 1.17. Either way, volatility around the announcement is almost guaranteed.
AUD – The Australian dollar has been quietly trending higher against the US dollar, helped by strong commodity prices and China stimulus hopes. If Brent stays above $95, AUD/USD could test 0.73 in the next two weeks.
This is a week to be selective. ECB on Thursday, US CPI on Friday, then the Fed and BOJ the following week. JPY pairs carry the highest event risk. DXY is stuck below 100, and it will take a hot CPI print to break it higher. Watch the 155 level on USD/JPY and 1.1580 on EUR/USD as lines in the sand.
Indices
US stocks had a volatile week but ended mostly flat. The S&P 500 added just 0.1% to close at 7,718.60. The Nasdaq outperformed at +0.4%, finishing at 26,507, boosted by chipmakers late in the week. The Dow was the laggard, dropping 0.3% to 53,414 as credit-sensitive and cyclical stocks pulled back.
The week’s pattern was clear: sell on geopolitics, buy on tech. Tuesday saw a sharp drop after US-Iran strikes resumed. Wednesday and Thursday brought recoveries as Treasury yields eased and Nvidia gained over 3%. Friday’s strong NFP report reversed sentiment again, with the Dow losing 272 points as rate hike fears returned.
The 10-year Treasury yield hit 4.82% mid-week, a level not seen since November 2023. Rising yields remain the biggest headwind for equities, especially for rate-sensitive sectors like real estate and utilities.
Friday’s US CPI will set the tone for equities heading into the Fed meeting. A hot print could send yields higher and push the S&P 500 back below 7,700. A cool print would be relief for bulls. September is historically the weakest month for stocks, so stay cautious on long positions. Watch the 7,630 level on S&P 500 as near-term support.
Gold & Oil
Gold finished the week around $4,437, roughly flat after a turbulent few days. It rallied towards $4,540 on Thursday when the dollar weakened and yields dipped, but gave back most of those gains on Friday after the strong NFP report lifted rate hike expectations. Gold is caught between safe haven demand from the Middle East conflict and the growing probability of a Fed hike. The 100-day moving average at $4,354 is holding as support. The 200-day at $4,534 is acting as a ceiling.
Brent crude surged nearly 9% to $96.28, its strongest weekly gain since mid-July. The US-Iran exchange of strikes drove the entire move, with Brent briefly touching $97 mid-week. WTI followed, closing at $91.48. OPEC+ kept October output unchanged on Sunday, removing any hope of extra supply. US diesel prices hit a record high.
Gold is stuck in a $4,354 to $4,534 range until CPI gives it a reason to break out. A soft CPI could send it towards $4,550. A hot one could push it back below $4,400. For oil, the $100 level on Brent is now within reach if Hormuz tensions escalate further. Watch for any US-Iran de-escalation signals, which could trigger a sharp pullback.
Week in Review
- US-Iran strikes resumed near the Strait of Hormuz, pushing Brent up 9%.
- August NFP smashed expectations at +162K, lifting rate hike odds to 60%.
- Yen surged 2% on BOJ hike bets and intervention speculation.
- 10-year Treasury yield hit 4.82%, the highest since November 2023.
- OPEC+ kept October production unchanged amid Hormuz uncertainty
- ECB rate decision, Thursday 10 September. Could hike again.
- US PPI on Thursday 10 September, first inflation signal.
- US CPI on Friday 11 September, the week’s most important release.
- Japan GDP data on Monday 7 September.
- China CPI and PPI on Wednesday 9 September.
