Action Insight

The Australian Dollar is the week’s worst-performing major currency even with a September RBA hike to 4.60% essentially fully priced—the weakness reflects position lightening ahead of uncertain vote composition and guidance, not doubt about the hike itself, with AUD/USD now testing 0.7006 support.

Gold has held its 4,230.70 support through a sharp Treasury yield surge to multi-decade highs, but the real test isn’t whether it can absorb a short-lived spike—it’s whether that support survives a sustained regime with the 10-year yield staying above 5%.

Dollar strengthened against every major currency Thursday as three drivers moved together: October Fed hike odds surged to 77.5%, from roughly 53% a day earlier and under 10% a month ago, pushing the 10-year Treasury yield to around 5.14%, its highest since 2007; Brent extended its rally above $105 as Houthi forces advanced toward the Bab el-Mandeb corridor, opening a second oil chokepoint alongside Hormuz; and the US and China extended their trade truce by only two months, to January 10, rather than locking in a more durable reset.

October Fed hike odds have surged to 69.7% on a booming flash PMI, driving the 2-year and 10-year Treasury yields to fresh multi-year highs—and pushing EUR/USD toward a structural decision zone at 1.1323–1.1353.

Brent completed a round trip, falling into the low $98s on Tuesday as traders priced a faster Hormuz reopening, then reclaiming $100 as focus shifted from whether Iran's diplomatic offer is real to how long any agreement would take to restore actual oil flows. CAD strengthened broadly on the oil rebound, but USD/CAD still edged higher because Dollar has an additional tailwind of its own: a hawkish week of Fed commentary keeping meaningful odds on an October hike.

With an SNB hold at 0% close to fully priced, EUR/CHF and GBP/CHF are already rolling over on a different mechanism—falling oil is easing inflation pressure elsewhere, reducing the need for other central banks to widen their rate advantage over Switzerland and relieving carry pressure on the Franc.

Gold and Silver face the same stronger-Dollar, more-hawkish-Fed headwind this week, yet Silver is outperforming and pulling the Gold/Silver ratio to a three-month low—a divergence that lines up circumstantially with renewed AI capex enthusiasm rather than anything gold-specific.

Brent broke below $100 after Saudi Arabia restarted its East-West Pipeline, capable of rerouting up to 4 million barrels per day, roughly 4% of global supply, around the Strait of Hormuz, and a senior Iranian official told Reuters Tehran could reopen Hormuz within seven days if Washington eases military pressure. Yet FX didn't confirm the move uniformly: CAD isn't broadly underperforming despite the drop, AUD and NZD diverged sharply from each other with no oil or data catalyst, and Dollar stayed broadly firm on the day's heat map even as oil fell.

Brent oil broke below $100 after Iran reportedly offered to reopen the Strait of Hormuz within seven days, but the quick recovery toward 99.55 shows markets are testing the story, not embracing it—making 100.26 the level that separates a genuine break from a false trigger.

Nasdaq hit a fresh record and Bitcoin broke above $84,000 just days after the Fed hiked and raised its projected rate path, as AI investment conviction and a separate regulatory catalyst overpowered the higher-rate headwind—though breadth remains narrow, with only about 30% of S&P 500 stocks above their 50-day averages.

Today's themes: Broad Dollar/FX: little conviction as markets wait for Wednesday's flash PMIs and this week's Trump-Xi summit; Dollar Index holding around 100.22 with its post-FOMC advance losing momentum. Oil: Brent fell to an 11-day low near $100 despite fresh Houthi attacks on Riyadh and Saudi Aramco's Yanbu facility,...

Gold is stalling just below 4,400 even as oil retreats and the Dollar’s post-FOMC rally loses steam, leaving India’s distorted physical demand as a plausible but unconfirmed partial explanation for the muted rebound.

Australia’s Big Four banks now all expect a September RBA hike to 4.60%, but the real disagreement has shifted to how high the cash rate ultimately needs to go—a question AUD/NZD, already stretched near 1.25, won’t settle until October 28 CPI.

Fed Chair Warsh’s description of Wednesday’s hike as removing “a dose of accommodation” drove the 2-year Treasury yield and Dollar Index sharply higher, but Fed funds futures barely moved the expected destination of the tightening cycle—leaving Brent’s $100 test as the upstream variable that decides whether the front end’s repricing gets confirmed.

What's happening: AUD led the major currencies Friday while Yen was weakest. The BoJ hiked its policy rate 25bp to 1.25%, its highest since 1995, on a 7–2 vote, yet Yen weakened past 157 against Dollar, JGB yields fell and Nikkei rose. The RBA made no rate decision, but...

Silver’s correction from 71.16 completed as a three-wave decline to 62.27, well above the $60 danger zone, with a firm break of 68.32 now the near-term test for whether the broader advance from 54.77 is resuming toward 80.32.

USD/JPY is testing 157.11 as one widening policy differential, not two separate stories—the Fed is accelerating into a new tightening phase while the BoJ’s divided vote reduced the odds of a back-to-back hike, both reinforcing the same Dollar-favorable repricing.

Dollar retreated from its post-FOMC highs as Brent crude dropped more than 3% to below $103 and WTI fell around 2.8% to $99.5, moving back under the psychologically important $100 level. DXY pulled away from levels above 100.3, while Sterling pared part of its initial decline after the Bank of England held Bank Rate at 3.75% on a 6–3 vote.

Gold tested its critical 4,230.70 support after Wednesday’s hawkish Fed hike but held, rebounding on a bullish four-hour divergence—a credible reversal setup that still needs a firm break of 4,368.20 to be confirmed.

The Dollar Index confirmed a double-bottom reversal after Wednesday’s 25bp hike, with the 2-year Treasury yield and a weaker Dow reinforcing the signal that markets are pricing roughly 100bp of tightening—well beyond the Fed’s own 4.1% median through 2027.