Good morning traders from a sunny 20°C Amsterdam, where conditions around IntelliTrade HQ should stay pleasant before temperatures reach roughly 23°C this afternoon. Coffee is on the desk, Friday’s jobs shock has had the weekend to settle, and the first thing that stands out this morning is that the dollar is already trying to push back. Oil is higher again, USD/JPY is back above 158, and Wednesday’s inflation report has become the event that can either confirm last week’s move or expose it.
Overall Market Sentiment:
The mood is cautiously constructive, but not clean risk-on.
Asian equities are mostly higher after Wall Street finished last week at record levels, helped by the drop in U.S. rate expectations after payrolls fell. At the same time, Brent has climbed back toward $85 and the dollar is slightly firmer from Friday’s lows.
The cleaner read for me is that markets believe the Fed has less room to tighten after the jobs report, but they are not comfortable carrying that conclusion into Wednesday without seeing CPI.
That matters because weak employment and softer inflation would tell roughly the same story. Weak employment and stubborn inflation would be a completely different problem.
Geopolitics:
The Strait of Hormuz remains the main geopolitical link into markets. Discussions around new shipping arrangements are progressing, but normal traffic has not fully returned and several conditions around reopening the waterway remain unresolved.
Brent moving back toward $85 this morning is a reminder that the geopolitical premium has been reduced, not removed.
The mistake here would be treating July’s oil shock as yesterday’s problem. If crude starts rebuilding momentum before CPI, inflation expectations can become uncomfortable again very quickly.
Macro Calendar:
Today
- The U.S. calendar is light: There is no major American release today capable of settling the Fed debate. That leaves Friday’s weak payroll report, Treasury yields and positioning ahead of CPI doing most of the work.
- The RBA meeting begins: Australia’s two-day policy meeting starts today ahead of Tuesday’s decision. Recent inflation data were softer, but domestic price pressure is still high enough that the bank cannot simply declare the problem finished.
- Bank of Japan policy debate: The latest BOJ meeting summary showed that several policymakers are becoming more open to faster normalisation. That matters for JPY because official intervention is no longer the only source of resistance against yen weakness.
- China inflation reaction: Softer July consumer and producer inflation has reinforced concern around domestic demand. That is more relevant for AUD and NZD than the headline equity strength might suggest.
The rest of this week
- Tuesday, Reserve Bank of Australia: The current cash rate is 4.35%, and the decision will come with updated forecasts and a press conference. AUD will care less about a widely expected unchanged decision and more about whether the bank still thinks another increase could eventually be needed.
- Wednesday, U.S. CPI: This is the week’s main FX event. After July payrolls fell and earlier employment was revised lower, softer inflation would reinforce Fed patience. A stronger core reading would bring September tightening risk straight back into the discussion.
- Thursday, U.S. PPI and UK GDP: Producer inflation should show whether tariff and supply costs are still working through American businesses. UK second-quarter GDP is the bigger sterling test and should tell us whether the economy retained momentum after a relatively solid first quarter.
- Friday, U.S. retail sales and consumer sentiment: This is the growth side of the U.S. argument. Weak employment matters much more if household spending also starts fading. Resilient consumption would make the slowdown look less severe.
Currency Outlooks:
⚖️ USD - Friday hurt, Wednesday decides how much
The dollar index is around 99.7, slightly firmer this morning after touching its weakest area since early June. EUR/USD is near 1.1550, GBP/USD around 1.3490, and USD/JPY has recovered toward 158.3.
Friday changed the dollar story because weak payrolls gave USD pressure a genuine U.S. macro reason. Treasury yields fell and the probability of another Fed increase in September dropped sharply.
But the dollar is already reminding us that one weak jobs report does not settle monetary policy.
Brent is rising again. The 10-year Treasury yield is still around the mid-4.6% area. And Wednesday’s CPI arrives with markets now expecting inflation to continue cooling.
That expectation itself creates risk.
The cleaner read for me is that USD risks are mixed today with a softer broader tilt. The bias leans further toward weakness if CPI confirms that inflation is cooling alongside employment. It firms again if core inflation refuses to cooperate.
The dollar has cooled. This time the macro foundation has weakened too. But Wednesday still has to confirm it.
🔺 EUR - Lower U.S. yields still matter more than Europe’s own story
EUR/USD is holding around 1.1550, close to its strongest area since mid-June.
The euro continues benefiting from softer U.S. yields and a much less severe energy shock than Europe faced during July. Brent around $85 is not cheap, but it is far easier for European households and manufacturers to absorb than crude above $100.
I would not overcomplicate this. Europe still does not have a powerful growth story. EUR is doing better because two major problems, the U.S. yield gap and the energy shock, have become less hostile at the same time.
Risks lean toward relative strength while U.S. yields stay contained. That tilt weakens quickly if Wednesday’s CPI rebuilds the Fed argument or Brent starts moving back toward the $90s.
🔺 GBP - Sterling has held up, now growth needs to help
GBP/USD is trading around 1.3480 to 1.3490, not far below its recent five-week high.
Sterling still has some policy support from a Bank of England that remains cautious about inflation. Lower oil also helps the UK through cheaper imported energy and less pressure on household budgets.
Thursday is where the domestic story gets tested.
UK GDP needs to show that growth remained reasonably resilient during the second quarter. If it does, GBP has something more useful than a simple softer-dollar story.
Risks lean modestly toward strength. The bias weakens if GDP disappoints and markets start asking whether restrictive policy is doing more economic damage than expected.
🔺 CAD - Friday’s employment surprise changed the conversation
CAD finally received the domestic catalyst it had been missing.
Canada’s strong July employment report and lower unemployment gave the currency a reason to strengthen even though oil remains far below July’s peak. That is important because CAD had previously struggled to benefit even when Brent was above $100.
Oil rebounding toward $85 this morning adds a little more support, although I would not turn this into a pure commodity story again.
The cleaner read for me is that CAD risks lean toward relative strength while labour-market resilience and firmer crude work together.
That view weakens if the employment surprise proves temporary or a renewed global slowdown begins dominating the oil story.
⚖️ CHF - Useful defensively, but not today’s main macro expression
CHF starts the week in a quieter position.
Record equity markets reduce immediate defensive demand, while geopolitical uncertainty around Gulf shipping prevents the safe-haven story from disappearing completely.
Lower U.S. rate expectations are mildly helpful against USD, but the yield difference remains large.
Risks are balanced. CHF becomes more relevant if Wednesday’s inflation report creates a stagflation scare rather than simple Fed relief.
⚖️ JPY - Official support now has a more hawkish BOJ behind it
USD/JPY has recovered toward 158.3, giving back part of the intervention-driven move from last week.
I would not read that as intervention failing.
The pair is still well below July’s extreme near 164, and the latest BOJ discussion shows that several policymakers are becoming more uncomfortable with inflation and the slow pace of normalisation.
That matters because the yen now has three potential sources of support: official intervention, a more active BOJ debate and softer U.S. rate expectations.
The problem is still the yield gap. It remains wide enough to prevent a simple JPY strength story.
Risks look mixed today, but the balance is much less negative than it was a few weeks ago. Another soft U.S. inflation report would strengthen the yen’s case. Higher U.S. yields would put the old problem straight back on the screen.
⚖️ AUD - Tuesday’s RBA message matters more than the decision
AUD/USD is around 0.7060, slightly softer this morning despite stronger regional equities.
This is where I think traders need to separate Australia from the broader risk-on story. The currency has done reasonably well as U.S. yields fell, but softer Australian inflation has taken some pressure out of the RBA argument.
Tuesday will tell us whether policymakers agree.
The rate itself may stay unchanged. The forecasts and language around underlying inflation are the useful part.
Risks remain balanced. AUD support improves if the RBA keeps the possibility of tighter policy alive. The bias weakens if the bank clearly shifts toward patience while China’s domestic data remain soft.
🔻 NZD - Softer labour conditions still matter
NZD/USD is trading around 0.5890, holding close to recent levels but struggling to develop the same domestic story as several other currencies.
New Zealand unemployment rose to 5.6% last week and wage pressure remained subdued. That gives the RBNZ a weaker labour backdrop at exactly the time markets are becoming more sensitive to signs of economic cooling.
The softer U.S. dollar provides support, but I would not ignore the domestic divergence.
Risks lean toward relative weakness, particularly if markets continue reducing expectations for tighter New Zealand policy. That tilt improves if global risk sentiment stays strong and U.S. CPI pushes Treasury yields lower again.
Cross-Asset Wrap:
- 🪙 Gold: Gold is trading around $4,325 to $4,335, easing slightly after reaching a seven-week high following Friday’s employment shock. The softer dollar and lower real yields remain the main support, while this morning’s small USD rebound and firmer oil are creating some consolidation. Watch Wednesday’s CPI because the next meaningful gold move is likely to come through real yields rather than geopolitics alone. [USD] [REAL YIELDS] [CPI]
- 🥈 Silver: XAG/USD is trading around $64, holding close to the upper end of last week’s strong rebound after gaining almost 10% across the week. Lower U.S. yields and the softer dollar are supportive, while resilient technology shares continue helping through the industrial-demand channel. Watch whether CPI keeps the rates story supportive without triggering renewed concern about growth. [USD] [YIELDS] [INDUSTRIAL DEMAND]
- 🛢 Oil (Brent): Brent is trading around $84 to $85 per barrel, up from Friday’s close as uncertainty around Strait of Hormuz shipping arrangements keeps part of the geopolitical premium alive. Supply access and regional security remain the main drivers, while expectations of eventual normalisation continue limiting the move compared with July’s spike. Watch actual tanker flows and whether diplomatic progress translates into a genuine reopening of capacity. [SUPPLY] [GEOPOLITICS] [INFLATION]
- 📈 Stocks: Asian equities are mostly firmer, with Japan’s Nikkei up around 2%, South Korea gaining roughly 0.8% and the broader regional index also positive, while S&P 500 and Nasdaq futures are modestly higher. Lower Fed expectations and strong earnings continue supporting technology and growth shares, although softer Chinese inflation is a reminder that regional demand remains uneven. Watch whether equities can keep treating weaker U.S. employment as rate relief if Wednesday’s CPI comes in firmer than expected. [EARNINGS] [YIELDS] [RISK]
- ₿ Crypto: Bitcoin is trading around $65,000 to $65,300, holding relatively steady after last week’s drop in U.S. rate expectations. Softer real yields and a weaker dollar have improved the liquidity backdrop, but BTC has still reacted less aggressively than precious metals and major equity indices. Watch whether Wednesday’s inflation data create a stronger move in real yields and broader liquidity conditions. [LIQUIDITY] [REAL YIELDS] [RISK]
The main thing I care about today is that the market has already decided Friday’s jobs report was enough to reduce Fed risk.
Wednesday decides whether that was too quick.
This is the part I would not misunderstand.
Weak employment and softer inflation would give the Fed a fairly straightforward reason to stay patient. The labour market is cooling, inflation is improving and financial conditions would not need another push from policy.
Weak employment and stronger inflation is a completely different setup.
Then the Fed has to choose between protecting inflation credibility and avoiding more damage to employment. That is where markets become much harder to read because higher inflation is no longer arriving alongside obviously strong growth.
The dollar reaction becomes less simple too.
A hot CPI can lift yields and support USD initially, but if markets begin worrying about stagflation, the longer-term response across currencies, equities and gold can become messy.
That is why I would not reduce Wednesday to one number being “good” or “bad” for the dollar.
The details matter.
Core inflation matters. Goods prices matter because tariffs can show up there. Housing and services matter because they tell us whether domestic inflation is actually cooling. Oil matters because the energy shock is trying to rebuild part of its premium again.
There are also a few currency-specific stories that deserve attention.
CAD looks better after Friday’s labour report. JPY finally has a BOJ discussion that is moving in the same general direction as official intervention. AUD has tomorrow’s RBA meeting. NZD has lost some support after its own labour market weakened.
So my actual view this morning is not simply weaker dollar.
It is a dollar that has lost part of its policy advantage and now needs inflation to rebuild it.
EUR and GBP have room to stay supported while U.S. yields remain contained. CAD finally has its own domestic reason for resilience. JPY is no longer fighting the entire macro environment alone.
The mistake here would be chasing Friday’s conclusion before Wednesday gives us the missing half of the story.
I would not overcomplicate this.
Friday told us U.S. employment is weaker than we thought.
Wednesday tells us whether inflation is weak enough for that to matter.
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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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