Good morning traders from a partly sunny 11°C Amsterdam, where it is a cool start around IntelliTrade HQ before temperatures climb toward 22°C this afternoon. Coffee is on the desk, markets are still waking up, and the dollar is starting the week near multi-month lows even though U.S. long-term yields remain painfully high. Oil has pulled back toward $93 this morning, but with major Iran sanctions due later today, I would not read too much into that decline yet.
Overall Market Sentiment:
The mood is cautious and mixed.
The dollar remains under pressure, gold is pushing further into three-month highs and equities are struggling to build much momentum ahead of Nvidia and Jackson Hole. At the same time, the U.S. 30-year yield is still above 5.2% and markets are only pricing around a 40% chance of another Fed increase in September.
That is still the strange part of this market.
My actual view today is that the dollar has a confidence problem more than a simple interest-rate problem. High yields would normally help USD. Instead, markets are asking whether those yields reflect attractive U.S. returns or compensation for inflation, fiscal pressure and policy uncertainty.
The mistake here would be assuming Friday’s dollar weakness automatically becomes a straight-line move this week.
PCE and Jackson Hole can still change the conversation quickly.
Geopolitics:
Today’s main geopolitical event comes later, when the U.S. is expected to announce a new package of sanctions against Iran.
Markets are watching whether those measures extend aggressively toward countries that continue trading with Tehran. Iran has responded by threatening wider disruption to Gulf energy exports, while actual commercial traffic through the Strait of Hormuz remains dramatically below normal levels.
Brent is down toward $93 this morning after gaining more than 6% last week, but that looks more like positioning before the sanctions announcement than a genuine resolution of the supply problem.
That matters because fewer than 20 commodity vessels crossed Hormuz over the weekend, with traffic still roughly 90% below pre-conflict levels.
I would not overcomplicate this. The political language will be loud today. Physical shipping is the cleaner thing to watch.
Macro Calendar:
Today
- Chicago Fed National Activity Index, 14:30 Amsterdam time: Monday is light on traditional tier-one data, but this broad activity measure can add another piece to the July growth picture. After weak payrolls and retail spending, markets want to know whether softness is becoming more widespread.
- New York Fed labour-market survey, 17:00 Amsterdam time: Employment has become much more important since July payrolls declined. This survey can give some colour on workers’ confidence, job transitions and expectations around the labour market.
- U.S. Iran sanctions announcement, around 20:00 Amsterdam time: This is probably the bigger market event today. The details matter for oil, inflation expectations and the defensive side of the dollar, particularly if the measures target major buyers of Iranian energy.
The rest of this week
- Tuesday, U.S. consumer confidence and new home sales: Housing remains under pressure from expensive mortgages while household confidence has softened. These reports will help show whether weaker employment is feeding into broader consumer caution.
- Wednesday, U.S. GDP, durable goods and core PCE, 14:30 Amsterdam time: This is the main data event of the week. Markets get revised Q2 growth and July personal income, spending and the Fed’s preferred inflation measure at the same time. I care most about whether core PCE confirms the recent improvement in CPI and PPI.
- Wednesday, Nvidia earnings: This matters well beyond one stock. AI investment has become a huge part of the U.S. manufacturing, financing and equity story, so Nvidia has to show that earnings can justify the extraordinary amount of capital being committed across the sector.
- Thursday, U.S. jobless claims and BOJ Deputy Governor Himino: Claims test the U.S. labour slowdown again, while Himino’s speech could matter significantly for JPY with markets already discussing another BOJ increase in September.
- Friday, Jackson Hole and Fed Chair Kevin Warsh: This is the policy event markets have been waiting for. The important question is how Warsh talks about weaker employment, persistent inflation and the recent instability in long-term Treasury yields without relying heavily on forward guidance.
Currency Outlooks:
🔻 USD - High yields are no longer giving the dollar a free pass
The dollar index is around the 96.8 to 97.0 area, near multi-month lows. EUR/USD is around 1.1680, GBP/USD near 1.3650 and USD/JPY just below 159.
The dollar did not get much help from Friday’s strong U.S. services numbers.
That matters.
If activity is strong and Treasury yields are high, USD would normally respond pretty well. Instead, the currency still finished last week under pressure.
The cleaner read for me is that markets do not fully trust the reason yields are elevated.
The U.S. 30-year yield remains around 5.25%, close to levels not seen since 2007. Inflation risk, government debt, heavy financing needs and uncertainty around Treasury intervention are all sitting inside that number.
Wednesday’s core PCE can change the balance.
If underlying inflation cools again, the immediate Fed argument weakens further. If it stays sticky around the low-3% area, markets have to reconsider how comfortable the Fed can really be.
For now, risks lean toward USD weakness.
That bias weakens if PCE surprises firmly or Warsh convinces markets that the Fed is much more inflation-focused than current pricing suggests.
🔺 EUR - The euro finally has some domestic help
EUR/USD is holding around 1.1680, still close to last week’s three-month high.
I like the change in the euro story more than the level itself.
Earlier this summer, EUR mostly strengthened when something went wrong in the United States. Now euro-area business activity has improved, manufacturing has recovered and new orders are looking healthier.
That gives the currency something domestic to work with.
Brent near $93 is still the obvious problem. Europe does not benefit from expensive imported energy, and another move toward $100 would hit the growth story fairly quickly.
Risks lean toward relative EUR strength while U.S. confidence remains fragile and European activity holds together.
The mistake here would be assuming Europe has suddenly become immune to oil. It has not.
🔺 GBP - Sterling keeps holding its ground
GBP/USD is around 1.3650, keeping sterling near its strongest region in several months.
There is no major UK release today, which means the pound should trade more heavily off the wider dollar, yield and risk picture.
The domestic foundation remains reasonably solid.
UK services activity strengthened in August, growth has avoided the worst-case scenario and the Bank of England still has enough inflation pressure to stay cautious even though wages and services inflation have cooled.
That is a useful combination.
Risks lean toward relative GBP strength while U.S. policy uncertainty remains elevated.
The tilt weakens if global yields push sharply higher again because the UK is hardly insulated from the same long-term borrowing-cost problem.
🔻 CAD - The trade story has overtaken the oil story
USD/CAD is around 1.3800, with the Canadian dollar starting the week softer.
That makes sense.
Canada had built a decent macro foundation through stronger employment and Brent above $90. Then U.S.-Canada trade negotiations broke down and 50% tariffs were imposed on a range of Canadian goods, with Canada preparing retaliation.
That changes the balance.
Oil still helps Canada’s terms of trade. But a serious deterioration in access to its largest export market creates a much more direct growth problem.
The mistake here would be looking at $93 Brent and assuming CAD automatically benefits.
Risks lean toward CAD weakness while the trade conflict remains unresolved.
If negotiations restart, that picture can improve quickly because the labour and energy backdrop underneath CAD is still better than it was earlier this summer.
🔺 CHF - The franc benefits when the dollar itself becomes part of the concern
USD/CHF remains around the 0.80 region, with the franc holding close to recent highs.
This is one of the more interesting defensive stories.
Normally, geopolitical risk supports both USD and CHF, with the dollar usually having the additional yield advantage.
Right now, some of the uncertainty is specifically about U.S. debt markets and policy credibility.
That changes the normal relationship.
CHF risks lean toward strength while fiscal concerns, Middle East tensions and unstable global bond markets remain elevated.
The limitation is still yield. If Jackson Hole restores confidence in U.S. policy without reigniting bond stress, the dollar can regain part of its normal defensive advantage.
⚖️ JPY - The BOJ is getting closer, but U.S. yields remain the problem
USD/JPY is around 158.9, staying below 160 but still nowhere near the levels Japan would probably be comfortable with.
The yen has more going for it than it did a month ago.
Japanese inflation is firming. Business activity improved. Government bond yields are elevated. Markets increasingly expect another BOJ move as early as September.
Deputy Governor Himino speaks Thursday, and I think that matters.
If he reinforces the idea that policy normalisation is moving closer, JPY gets another domestic reason to stabilise.
The problem is still U.S. yields.
A 30-year Treasury yield above 5.2% and a 10-year yield around the upper-4% area keep the international rate gap extremely wide.
The cleaner read is mixed.
JPY has stronger policy support and obvious intervention sensitivity near 160, but it still needs either lower U.S. yields or a firmer BOJ signal before that becomes a cleaner strength story.
⚖️ AUD - Three-month highs despite weaker jobs tells us this is mostly USD
AUD/USD is around 0.7165, just below its strongest level in roughly three months.
That might look strange after last week’s weak Australian employment report.
Jobs declined. Unemployment rose to 4.5%. Hours worked fell. That weakened the immediate argument for further RBA restriction.
And yet AUD kept climbing.
That tells me the latest move is heavily about the dollar rather than a suddenly stronger Australian economy.
Tuesday’s RBA minutes may sound fairly firm, but remember they describe a meeting held before the weaker jobs numbers.
I would not overcomplicate them.
Risks are balanced. The global dollar backdrop is supportive, but Australia’s domestic policy case is less convincing than it was before the labour report.
🔻 NZD - Strong level, weaker foundation
NZD/USD is around 0.5970, also sitting just below a three-month high.
Like AUD, the currency has benefited heavily from broad dollar weakness.
The New Zealand-specific story is less impressive.
Unemployment is elevated, wage growth has cooled and the economy carries more spare capacity than several other major markets.
That leaves NZD relying on external conditions.
Lower U.S. yields help. Better China data help. Strong global risk appetite helps.
But those are not domestic reasons.
Risks lean toward relative weakness even while the exchange rate remains elevated. The bias improves if Wednesday’s PCE produces a much cleaner decline in U.S. yields and risk appetite strengthens.
Cross-Asset Wrap:
- 🪙 Gold: Gold is trading around $4,640 to $4,655 per ounce, up around 1% this morning and at its highest level in more than three months after gaining over 5% last week. Dollar weakness and concern around U.S. debt and policy credibility are the main drivers, while high real yields remain the obvious counterweight. Watch whether Wednesday’s PCE finally pulls real yields lower or forces markets to reconsider the Fed path. [USD] [REAL YIELDS] [FISCAL RISK]
- 🥈 Silver: XAG/USD is trading around $69, consolidating close to recent highs after following gold sharply higher last week. Dollar weakness is supportive, while stronger European and Japanese manufacturing data help the industrial-demand side, although elevated global borrowing costs remain a constraint. Watch Nvidia and U.S. activity data for whether the technology and manufacturing story remains strong enough to support that industrial component. [USD] [YIELDS] [INDUSTRIAL DEMAND]
- 🛢 Oil (Brent): Brent is trading around $93.00 per barrel, down roughly 1.5% this morning after gaining more than 6% last week. Positioning ahead of new U.S. sanctions is weighing on crude today, while extremely limited Hormuz traffic and Iran’s threat to disrupt wider Gulf exports keep the supply risk underneath. Watch the actual sanctions package and physical shipping flows after the announcement. [SUPPLY] [GEOPOLITICS] [INFLATION]
- 📈 Stocks: Asian equities are softer, with the broader regional index outside Japan down close to 1%, while S&P 500 and Nasdaq futures are roughly flat. Nvidia’s Wednesday earnings, elevated long-term yields and U.S.-Canada trade tensions are keeping risk appetite cautious at the start of the week. Watch whether technology earnings can justify current valuations while financing costs remain this high. [NVIDIA] [YIELDS] [RISK]
- ₿ Crypto: Bitcoin is trading around the $77,000 area, holding most of last week’s extraordinary advance after gaining more than 20% against the dollar. Dollar weakness, improved liquidity expectations and concern around traditional U.S. assets have supported the move, while high real yields remain an unusual headwind for such a strong crypto rally. Watch whether PCE and Jackson Hole preserve the weaker-dollar narrative or push liquidity expectations back the other way. [LIQUIDITY] [USD] [RISK]
The main thing I care about today is that Friday gave the dollar some decent U.S. economic news and it still could not really recover.
That is useful information.
U.S. services activity was strong.
Treasury yields are high.
The Fed has not declared the inflation problem finished.
Normally that combination gives USD plenty of support.
It did not.
So I think we have moved beyond a simple Fed story.
The market is now asking whether long-term U.S. yields are high because the American economy is strong, or because investors need more compensation for inflation, debt and policy uncertainty.
Those two explanations look very different for the dollar.
That is why Wednesday matters so much.
PCE gives us the inflation part.
GDP gives us the growth part.
If growth is revised lower while core inflation cools, the Fed has much less reason to become more restrictive.
If growth holds up and core inflation stays sticky, Warsh gets a much stronger argument for keeping inflation at the centre of Friday’s message.
But even then, I want to see how the dollar reacts.
That is the key.
If decent U.S. data and high yields still cannot lift USD, then the confidence issue is becoming more important than the rate differential itself.
I would not overcomplicate Nvidia either.
This is not suddenly an FX company.
But the scale of AI investment has become macro.
Technology firms are raising huge amounts of capital. Data centres are driving electricity demand. Semiconductor investment is supporting U.S. manufacturing. The equity rally itself affects household wealth and financial conditions.
If Nvidia justifies the optimism, that helps the U.S. growth story.
If it does not, markets may start questioning whether the enormous financing behind AI infrastructure is producing enough return.
That would matter when long-term yields are already this high.
Then there is Iran.
Oil is lower this morning, but I do not see that as a clean improvement yet.
Commercial traffic through Hormuz remains extremely restricted, and we have not even seen the details of today’s sanctions package.
The mistake would be assuming a $1 decline in Brent means the geopolitical premium is disappearing.
It is not.
For currencies, the differences remain important.
EUR now has better European activity behind it.
GBP continues to look reasonably supported domestically.
CHF benefits from a world where confidence in USD itself becomes part of the risk discussion.
CAD has been hit by a genuine trade shock.
AUD and NZD are near three-month highs, but much of that strength is external rather than domestic.
JPY has the most interesting central-bank event outside the Fed this week because Himino can either reinforce or push back against growing expectations of a September BOJ move.
My actual view today is that dollar risks still lean toward weakness.
But I would not call it a clean bearish rates story.
It is messier than that.
High yields are still there.
Inflation is still above target.
Oil is still above $90.
The economy is still showing pockets of real strength.
And yet the dollar is struggling.
That is why the real test this week is not simply whether PCE is high or low.
It is whether the dollar can respond normally to the information it receives.
If it cannot, the market is telling us the problem has moved beyond the Fed.
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This is general, educational macro and FX commentary. It is not investment advice and not a trading signal.
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