Good morning traders from a hot and partly sunny Amsterdam, where it is around 19°C near IntelliTrade HQ before temperatures climb toward 32°C later today. The coffee is still warm for now, although that may need rethinking by lunchtime. On the screens, oil is falling hard, the yen is strengthening again and the dollar is starting the week under pressure. It looks calmer than last week, but there is more going on underneath than the first move suggests.
Overall Market Sentiment:
The mood is cautious but calmer. Brent has dropped below $84 as the United States and Iran prepare for talks, while coordinated support from Japan and the United States has pushed the yen much further away from last month’s extreme weakness.
That combination is weighing on the dollar and lowering some of the inflation pressure that dominated July. Still, Asian equities are struggling, especially in Japan and South Korea. My actual view is that the market has received relief from oil and FX intervention, but it has not received confirmation that the global risk environment is healthy again.
Geopolitics:
Fresh U.S. military action against Iran has been paused while negotiations take place, removing part of the immediate threat to energy infrastructure and the Strait of Hormuz. Brent has responded with a decline of more than 4%, which is also pulling Treasury yields lower.
The deal is not done. The mistake here would be treating scheduled talks as a finished diplomatic agreement. Oil can lose more of its geopolitical premium if discussions progress, but the premium can return quickly if negotiations fail.
Macro Calendar:
Today
- European and UK manufacturing PMIs: Final July surveys will show whether weak manufacturing conditions are stabilising. The pricing components matter because lower oil can provide relief even while tariff and supply-chain costs remain uncomfortable.
- German retail sales: The consumer side of Europe needs to improve if the region’s modest growth recovery is going to last. Lower energy prices help, but households still face high borrowing costs and weak confidence.
- U.S. ISM manufacturing and construction spending: New orders, employment and prices paid will be more useful than the manufacturing headline alone. A firm prices reading could limit the dollar’s decline, while weak employment would strengthen concern ahead of Friday’s jobs report.
The rest of this week
- Tuesday, U.S. job openings, trade and factory orders: Job openings will provide the first serious labour-market test. Markets are watching whether demand for workers is slowing gradually or dropping quickly enough to change the Fed discussion.
- Wednesday, New Zealand labour data, U.S. private employment and ISM services: NZD gets its main domestic event, while the U.S. releases will test both employment and service-sector inflation. The services prices component could matter more than the headline activity number.
- Thursday, U.S. jobless claims, productivity and labour costs: Better productivity would make wage growth easier for the Fed to tolerate. Rising labour costs without stronger output would create a more uncomfortable inflation picture.
- Friday, U.S. and Canadian employment: This is the week’s main FX event. Payroll growth, unemployment and wages will shape September Fed expectations, while Canada’s report gives USD/CAD a direct relative labour-market comparison.
Currency Outlooks:
⚖️ USD - Softer, but the jobs data still have the final word
The dollar index is around 99.7 after falling more than 1.5% last week. EUR/USD has reached the 1.1550 area, GBP/USD is close to 1.3480 and USD/JPY has moved down toward 156 following coordinated official support for the yen.
Two forces are working against USD this morning. Lower oil is reducing inflation and rate pressure, while the yen’s rise is forcing a wider adjustment across dollar positions.
The dollar has cooled, but it is not broken yet.
Long-term U.S. yields remain high, underlying inflation is still above target and several Fed policymakers continue to believe policy may need to become more restrictive. This week’s labour data will decide whether that argument becomes stronger or starts losing credibility.
The cleaner read for me is that USD risks are mixed with a softer immediate tilt. That tilt weakens if ISM prices remain firm and Friday’s employment report shows resilient hiring and wages.
🔺 EUR - Lower energy gives the euro a cleaner source of support
EUR/USD has traded toward 1.1560, its strongest area in roughly six weeks. The euro is benefiting from the weaker dollar, but today’s oil decline is equally important.
Europe imports a large share of its energy. Lower crude reduces pressure on household spending, industrial margins and the region’s external balance. That is a more useful EUR development than another small change in ECB expectations.
Risks lean toward relative strength while oil remains below $85 and U.S. yields stay contained. The bias weakens if European PMIs confirm deeper industrial weakness or the U.S. labour data rebuild the dollar’s rate advantage.
🔺 GBP - Sterling keeps its policy support
GBP/USD is near 1.3480 after reaching its strongest level in around two weeks. The Bank of England’s divided decision last week showed that policymakers are patient, but not fully comfortable with the inflation outlook.
Lower energy prices help the UK because they reduce imported inflation and pressure on household budgets. That gives GBP a slightly cleaner mix than it had when oil was trading above $100.
Risks lean toward relative strength while the BoE maintains some policy tension and the dollar remains soft. Sterling’s support weakens if incoming UK activity data show that high rates are causing a sharper slowdown.
⚖️ CAD - Falling oil removes support before Friday’s jobs report
CAD begins the week with a clear commodity headwind as Brent falls into the $83 to $84 area. Canada did not receive the full benefit when oil was above $100, but a rapid decline still removes part of its terms-of-trade support.
The positive side is that lower oil reduces the global growth threat and may improve risk sentiment if the decline reflects diplomacy rather than collapsing demand.
The cleaner read is mixed. Friday’s Canadian employment report needs to confirm that the domestic economy is stabilising. Without that confirmation, CAD remains caught between lower energy prices and a softer U.S. dollar.
⚖️ CHF - Less geopolitical urgency, but uncertainty remains
The franc is receiving less immediate defensive demand as oil falls and diplomacy returns to the Middle East conversation. Lower energy costs are helpful for Switzerland, although that benefit is not creating a major independent CHF move.
Risks remain balanced. The franc’s defensive support can return quickly if negotiations fail or equity weakness broadens beyond Asia.
🔺 JPY - Official action has changed the immediate balance
USD/JPY is trading around 156 after briefly touching the 155 area, well below July’s high near 164. Japan and the United States have confirmed coordinated intervention and made clear that further action remains possible.
That matters because the market is no longer dealing with Japan alone. U.S. participation gives the intervention more credibility and makes another rapid move against the yen much harder to treat casually.
Lower oil is also helping Japan by reducing imported energy costs. At the same time, expectations are increasing that the Bank of Japan may need to continue normalising policy sooner rather than later.
Risks lean toward JPY strength in the immediate picture. What traders should not misunderstand is that official intervention has changed the balance of pressure, not removed the underlying yield gap. A durable yen recovery still needs monetary policy and economic fundamentals to support the official effort.
⚖️ AUD - Lower oil helps sentiment, but Asian equities are not confirming it
AUD/USD is around 0.7030, supported by the softer dollar and reduced geopolitical inflation risk. Those conditions would normally create a cleaner environment for the Australian currency.
The complication is that Asian equities remain weak, with sharp declines in Japan and South Korea. Concerns about technology valuations and AI spending are still limiting the broader risk recovery.
AUD risks remain balanced. The currency has support from USD weakness, but weaker regional equities and disappointing Chinese activity prevent a stronger tilt.
🔺 NZD - Domestic labour data can strengthen its independent story
NZD/USD is trading near 0.5890 after benefiting from the weaker dollar and lower global yields. New Zealand’s recent inflation data already gave the currency some domestic policy support.
Wednesday’s labour report now needs to show whether employment and wage growth remain resilient. A stable labour market would reinforce the case for restrictive policy, while a sharp deterioration would place more focus on the economic slowdown.
Risks lean modestly toward strength before the data, although NZD remains sensitive to China and the wider equity mood.
Cross-Asset Wrap:
- 🪙 Gold: Gold is trading around $4,065 to $4,070, rising from Friday’s weaker close as the dollar and Treasury yields ease. Lower real yields are providing the main support, while reduced geopolitical urgency is limiting the safe-haven side of the move. Watch whether U.S. manufacturing and labour data extend the decline in yields. [USD] [REAL YIELDS] [JOBS]
- 🥈 Silver: XAG/USD is trading around $58.40 to $58.50, gaining more than 1% and tracking gold higher. Dollar weakness and lower yields are supportive, while poor Asian equity performance is keeping the industrial-demand picture less convincing. Watch the global manufacturing surveys and Wednesday’s U.S. services report. [USD] [YIELDS] [INDUSTRIAL DEMAND]
- 🛢 Oil (Brent): Brent is trading around $83.50 to $84.00 per barrel, down more than 4% after ending last week near $90. Planned U.S.-Iran talks and the decision to pause further military action are removing part of the supply premium, although key shipping routes have not fully normalised. Watch whether negotiations produce measurable progress rather than another temporary pause. [SUPPLY] [GEOPOLITICS] [INFLATION]
- 📈 Stocks: S&P 500 futures are up around 0.5% and Nasdaq futures roughly 0.8%, while Japan’s Nikkei is down close to 2% and South Korea’s KOSPI more than 4%. Lower oil and yields are supporting U.S. futures, but Asian markets remain sensitive to technology valuations, large AI spending commitments and recent volatility. Watch whether the U.S. recovery broadens beyond the largest technology companies. [TECHNOLOGY] [YIELDS] [RISK]
- ₿ Crypto: Bitcoin is trading around $63,200 to $63,500, holding relatively steady after a volatile end to July. A softer dollar and lower yields are improving liquidity conditions, while weak Asian risk sentiment is limiting momentum. Watch whether Bitcoin follows U.S. technology futures or remains contained before the employment releases. [LIQUIDITY] [REAL YIELDS] [RISK]
The main thing I care about today is that the dollar is losing two forms of support at the same time.
Oil is falling, which reduces inflation pressure and lowers part of the argument for higher U.S. rates. The yen is strengthening through coordinated intervention, which is forcing a wider reassessment of dollar positioning.
That is a real shift. But I would not turn it into a complete dollar-collapse story.
The U.S. 30-year yield remains above 5%, underlying inflation is still uncomfortable and the Fed has not closed the door on another move. The labour market now becomes the deciding factor.
The mistake here would be assuming that USD/JPY falling automatically means the entire dollar complex has changed direction. The yen has received direct official support. EUR and GBP have their own policy and energy arguments. AUD, NZD and CAD still face separate growth and commodity questions.
My actual view today is that USD weakness can continue while oil stays below $85 and Treasury yields drift lower. EUR and GBP have the cleaner relative support, while JPY remains backed by the threat of further official action.
That view weakens if today’s U.S. manufacturing prices are firm, Wednesday’s services data remain strong and Friday’s employment report confirms that the labour market is still resilient.
I would not overcomplicate this. Oil tells us whether the inflation shock is fading. The yen tells us whether intervention is still controlling the FX conversation. The U.S. jobs data tell us whether the dollar’s wider macro foundation is actually weakening.
Today, the dollar is under pressure. By Friday, we should know whether that pressure is broader than official intervention and one sharp move in crude.
Want to turn this market context into a trading plan?
Check today’s Currency Strength Meter and Economic Calendar inside IntelliTrade Pro.
This is general, educational macro and FX commentary. It is not investment advice and not a trading signal.
Need help decoding this article? Get our free Macro Decoder ebook when signing up to our newsletter using the sign up button below! No spam, just value.