Last week, gains in U.S. and Asian technology stocks lifted equity markets, while falling oil prices improved overall market sentiment, bringing a relatively positive end to a volatile week. The Bank of Japan’s widely anticipated rate hike failed to support the yen. As markets wrapped up a turbulent week, major global central banks generally shifted towards a more hawkish stance in response to persistent inflationary pressures.

One of Friday’s key market events was the Bank of Japan’s decision to raise its benchmark interest rate, as widely expected. However, the decision was not unanimous. The yen fell 1.2% against the U.S. dollar after 2 policymakers voted against the hike, suggesting that the BOJ may not continue raising rates as quickly as markets had initially expected.

In September, the average increase in interest rates across G10 economies was the largest since July 2023. 4 central banks have already raised rates, while others have indicated that similar action may be needed in the near future.

The Bank of England left rates unchanged on Thursday but warned that further hikes may be necessary if the war involving Iran continues. The European Central Bank also indicated that additional tightening could be required after raising rates last week. Meanwhile, Reserve Bank of Australia Governor Bullock said on Friday that some of the upside inflation risks previously highlighted by policymakers appear to be materialising.

Meanwhile, WTI crude fell to just above $95 per barrel, marking its 3rd consecutive session of declines. The move followed a Reuters report that China had asked Tehran to help restrain the Houthis after a series of military operations over the past week.

The U.S. dollar rose 0.2%, while gold climbed towards $4,400. U.S. Treasuries resumed their decline after a brief rebound, with the 10-year yield rising 2 basis points to 4.96%.

Bond markets faced another sharp sell-off during the week, with the U.S. 10-year Treasury yield briefly breaking above 5%, its highest level since 2007. Eurozone and UK government bond yields also reached multi-year highs over the past week, although Friday’s moves were relatively limited.

Friday’s “triple witching” may also have contributed to market volatility, with a significant amount of options notional value expiring in one of the larger expiry events on record.

With the Federal Reserve’s communication blackout period ending following Wednesday’s rate decision, attention will now return to comments from voting Fed officials.

Review of Last Week’s Market Performance:

U.S. stock indices finished mixed on Friday as rebounding Treasury yields raised concerns about a deteriorating macroeconomic environment. The S&P 500 gained 0.2%, the Dow Jones fell 95 points, while the Nasdaq rose 0.7%. Over the week, the Dow Jones fell 733 points, the Nasdaq gained 2.6%, and the S&P 500 rose 0.7%.

Gold climbed to a one-week high of $4,380 on Friday, recording its first weekly gain in 4 weeks as falling oil prices eased concerns over persistent inflationary pressures. However, gains were limited by a stronger U.S. dollar, which remained supported after the Federal Reserve raised rates by 25 basis points on Wednesday and signalled further hikes in the coming months.

Silver rose to around $66.250 per ounce on Friday, reaching its highest level in more than a week as falling oil prices eased concerns over persistent inflationary pressures. Gains were limited by a stronger U.S. dollar, which remained supported after the Fed raised rates by 25 basis points on Wednesday and indicated that further hikes could follow in the coming months. Markets currently price in a nearly 60% probability of another rate hike next month.

The U.S. Dollar Index rose to 100.37 on Friday, its highest level in 6 weeks, continuing to benefit from the latest Federal Open Market Committee (FOMC) decision and weakness in the yen. As expected, the Fed raised the federal funds target range by 25 basis points to 3.75%–4%. The Fed also signalled at least 1 more rate hike this year. Meanwhile, the Bank of Japan raised borrowing costs by 25 basis points as expected, but 2 policymakers voted against the move, suggesting that the central bank may not tighten policy as quickly as initially anticipated. The yen weakened as a result. The U.S. dollar gained nearly 1.3% over the week.

EUR/USD managed to regain some balance and rebound modestly from its lows as the trading week drew to a close, approaching the key 1.1500 level. The late recovery came as U.S. dollar momentum softened slightly. Next week, the Trump-Xi summit and tariff discussions are expected to be key areas of focus. USD/JPY resumed its advance during Friday’s European session, reaching a fresh 2-week high near 158.00. Despite the BOJ raising rates to 1.25% as expected and hawkish comments from Governor Ueda, the yen extended its decline as 2 unexpected dissenting votes against the rate hike weighed on the currency.

GBP/USD rebounded from earlier lows and traded near the key 1.3400 level ahead of Friday’s Wall Street close. Sterling’s recovery against the dollar coincided with softer U.S. dollar momentum and a broader improvement in risk sentiment. AUD/USD maintained a positive bias for a 2nd consecutive session, holding above 0.7100 during Friday’s Asian session as softer U.S. Treasury yields pressured the dollar. Hawkish comments from RBA Governor Bullock also strengthened rate-hike expectations and supported the Australian dollar. However, the Fed’s hawkish outlook and ongoing geopolitical uncertainty limited the dollar’s decline and capped gains in the pair.

Crude oil fell below $100 per barrel on Friday, giving up earlier gains after volatile trading and marking its 3rd consecutive session of declines. Markets increasingly expect the closure of Saudi Arabia’s key pipeline to have less impact on supply than initially feared. Satellite imagery showed that Saudi Arabia transported 2.8 million barrels per day through the Strait of Hormuz over the past 6 days, compared with just 700,000 barrels per day in August. WTI ended the week near $95.30.

Bitcoin rose 5.95% to $81,080.01, gaining 5.11% over the past week. Bitcoin’s breakout above key resistance reflected a combination of easing macroeconomic headwinds, renewed institutional spot demand, and positive regulatory developments. While the rebound showed strong market demand and solid structural support, institutional investors remain cautious about ongoing macroeconomic and liquidity risks. The MACD (12,26,9) reading stood at -817.491, indicating neutral conditions. The RSI was 64.225, also neutral, while Williams %R stood at 4.509, indicating overbought conditions and warranting close attention.

The U.S. 10-year Treasury yield rose 7 basis points to 5% on Friday, recovering from an 8-basis-point decline in the previous session as traders digested a more hawkish Federal Reserve and reassessed the monetary policy outlook. The 10-year yield was slightly below Tuesday’s 5.041%, its highest level since 2007. The sharp rise in U.S. bond yields coincided with increased market pricing for further Fed rate hikes.

Market Outlook for This Week:

This week, September 21–September 25, markets enter a period of data validation following the Federal Reserve’s hawkish rate hike. Long-term U.S. Treasury yields, U.S. inflation data, and geopolitical developments in the Middle East will be the key variables. Overall conditions are likely to remain volatile, while elevated interest rates continue to pressure risk-asset valuations.

The war in the Middle East will continue to influence energy prices and financial markets as major central banks raise interest rates to combat inflation. Meanwhile, growing calls to slow the development of artificial intelligence could affect industries that have supported global equities, credit issuance, and commodities. These issues, together with trade, are expected to be key topics at the highly anticipated meeting between U.S. President Trump and Chinese President Xi Jinping.

U.S. economic data releases will be led by durable goods orders. The U.S. will also release Purchasing Managers’ Index (PMI) data alongside the Eurozone and major economies including Japan, Australia, and India.

Australia will release labour market data, while India will publish infrastructure output figures. Central bank decisions from China, Switzerland, Sweden, Norway, Mexico, and Indonesia will also be closely watched.

Risk Warning: Central Bank Policy, Macroeconomic Data and Geopolitical Uncertainty

In addition to the key economic data and central bank meetings above, investors should pay particular attention to the following potential risks during the coming week:

 
U.S. inflation rebounds above expectations: If PCE comes in above expectations, markets could price in another 1 or even 2 Fed rate hikes this year. The U.S. 10-year Treasury yield could rise again, putting pressure on global risk-asset valuations, weakening equities, strengthening the U.S. dollar, and weighing on gold.

 
Weak demand at U.S. Treasury auctions: Poor demand could push long-term yields sharply higher, tighten liquidity conditions, and trigger correlated declines across asset classes.

 
A sudden deterioration in the Middle East: A sharp rise in oil prices could lift global inflation expectations, forcing central banks to maintain tighter monetary policy and putting pressure on both equities and bonds.

 
Rapid yen depreciation triggers large-scale Japanese FX intervention: A sharp rebound in the yen could lead to widespread unwinding of global carry trades, causing sudden declines across equities and commodities. This would represent a typical black swan risk.

 
Increasing capital outflows from emerging markets: Hong Kong equities, the renminbi, and commodities could come under pressure.

Conclusion:

The key focus for markets this week will be whether U.S. inflation data confirms the current policy outlook, with long-term U.S. Treasury yields acting as an important market indicator. Under the Fed’s baseline expectation of “higher rates for longer,” major asset classes are likely to remain highly volatile and range-bound, with limited potential for a strong one-way trend. The biggest risk is a rebound in inflation that pushes Treasury yields higher, while the main opportunity would come from easing inflation and a temporary recovery in risk assets. Geopolitical developments remain an unpredictable variable that could trigger sudden market moves at any time.

IMF Prescribes a Tougher Approach for the RBA: Be Ready to Raise Rates While Urging the Government to Cut Spending

The IMF warned on Thursday that the Reserve Bank of Australia may need to raise interest rates further as underlying inflation pressures remain persistent and questions remain over whether financial conditions are sufficiently restrictive. The IMF lowered its 2027 growth forecast for Australia to 1.6% and urged the government to reduce spending.

IMF’s Core View: The RBA Should Remain Ready to Raise Rates Further

Following its annual consultations with the Australian Treasury, Reserve Bank of Australia, and prudential regulator, the IMF issued a concluding statement saying that persistent underlying inflation pressures and uncertainty over whether financial conditions are sufficiently restrictive mean the RBA should remain ready to raise rates if necessary.

The IMF maintained its Australian GDP growth forecast for this year at 1.9% but lowered its 2027 forecast to 1.6%, down 0.1 percentage points from its previous estimate. The downgrade was attributed to an increased possibility of further RBA rate hikes. The IMF said inflation remains the central challenge, while weak productivity growth continues to weigh on the economy’s potential.

Key Risk: Another Surge in Global Energy Prices Could Trigger Second-Round Inflation Effects

The IMF specifically highlighted the risk that another sharp increase in global energy prices could create stronger second-round effects, pushing inflation expectations higher and requiring further policy tightening from the RBA.

The RBA’s inflation target range is 2%–3%. This risk is not purely hypothetical. The worsening conflict in the Middle East pushed Brent crude above $108 per barrel this week, representing a 35% increase since early August.

Australian consumer prices rose more than expected in July as fuel costs surged, while core inflation also exceeded forecasts. Financial markets currently price in around an 80% probability of a 25-basis-point RBA rate hike at its September 29 meeting, with some estimates as high as 87%. Markets also expect the cash rate to reach 4.85% by early 2027.

The Federal Reserve’s rate hike on Wednesday, its first since 2023, further reinforced the broader global tightening environment facing the RBA.

Fiscal Recommendation: Federal and State Governments Urged to Cut Spending

In addition to its warning on interest rates, the IMF urged Australia’s federal and state governments to reduce spending, arguing that greater budget discipline would help contain rising debt burdens and support efforts to control inflation.

The assessment presents a challenge for the Treasurer, who is already under pressure to provide a convincing narrative on living standards and prosperity.

The IMF broadly supported the government’s adjustments to investor tax settings while highlighting some concerns about unintended consequences. The IMF mission chief said previous consultations had identified Australia’s property tax settings, including negative gearing, as factors encouraging households to take on more leverage and invest in housing, adding to price pressures.

He said the government’s budget adjustments created a more balanced set of incentives that could redirect more investment towards other parts of the economy, describing the changes as a positive development in the tax system that could also support housing affordability.

Impact on the Australian Dollar: IMF Warning Reinforces Already Hawkish Market Expectations

AUD/USD has recently declined to its lowest level in nearly a month, primarily pressured by expectations surrounding Federal Reserve rate hikes. The Fed raised rates to 3.75%–4.00% on Wednesday, while its dot plot indicated another hike this year, providing broad support for the U.S. dollar and weighing on the Australian dollar alongside other non-U.S. currencies. Although the RBA’s 4.35% cash rate remains above the Fed’s new target range, this interest-rate advantage has provided limited support.

However, domestic policy expectations are providing another source of support for the Australian dollar. During Thursday’s September 17 Asian session, AUD/USD edged slightly higher and traded around 0.7094, up approximately 0.1%.

The IMF’s warning adds institutional weight to expectations already priced into markets, with the RBA potentially raising rates as early as September 29.

This provides some support for the Australian dollar because the IMF identified upside inflation risks, rather than downside growth risks, as the dominant concern.

For the Australian dollar in the near term, energy prices remain a more important driver than the IMF statement itself. Brent crude’s 35% rise since early August represents the direct channel through which the IMF believes second-round inflation effects could force the RBA to act.

With the Federal Reserve having just raised rates, a hawkish move from the RBA would keep Australia aligned with the broader global tightening cycle. This could provide support for Australian dollar crosses funded by currencies whose central banks are viewed as approaching the end of their tightening cycles.

Conclusion:

Overall, the IMF’s warning provides institutional support for the possibility of further RBA rate hikes, with the key concern being that energy-driven inflation could spread through second-round effects. Markets currently price in around an 80% probability of a September 29 rate hike, while the cash rate could reach 4.85% by early 2027. On the fiscal side, the IMF has urged the government to reduce spending to support efforts to control inflation, while offering conditional support for changes to investor tax settings.

For the Australian dollar, the IMF statement provides marginal support, but the real drivers remain the path of energy prices and the RBA’s actual policy decisions. If Brent crude remains elevated or rises further, expectations for a September RBA rate hike could continue to strengthen. If energy prices fall, concerns over second-round inflation effects may ease. The RBA’s September 29 decision and its alignment with the broader global tightening cycle will be key to determining the Australian dollar’s near-term direction.

U.S. 10-Year Treasury Yield Breaks Above 5%; Gold Faces Pressure but Remains Resilient as Traditional Market Relationships Begin to Break Down

Surging Treasury yields and growing expectations for further rate hikes continue to increase the opportunity cost of holding non-yielding gold, creating considerable short-term pressure on prices. Several factors combined to push the U.S. 10-year Treasury yield briefly above the key 5% psychological level. However, the traditional relationship in which rising Treasury yields and a stronger U.S. dollar weigh on gold has begun to weaken. Central bank gold purchases and demand for protection against currency depreciation continue to support gold, while longer-term fiscal and monetary risks remain important underlying drivers.

The gold market continues to show solid underlying support, while the traditional relationship between gold, U.S. Treasury yields, and the U.S. dollar is beginning to break down. Below is a closer look at the factors driving Treasury yields higher and the independent resilience being shown by gold.

Multiple Factors Push the U.S. 10-Year Treasury Yield Above the Key 5% Level

Inflation concerns, geopolitical tensions, and U.S. fiscal risks have combined to push the benchmark 10-year Treasury yield briefly above the important 5% psychological level. For much of this year, Treasury yields have followed a pattern of “2 steps forward, 1 step back,” but the pace of the increase has accelerated significantly over the past month.

Escalating tensions in the Middle East have pushed crude oil prices to multi-month highs, while continued supply constraints have reignited inflation concerns. At the same time, markets are paying closer attention to the scale of U.S. debt issuance, increasing concerns over fiscal risks. Expectations for U.S. monetary policy have also become increasingly hawkish, further driving Treasury yields higher and putting significant pressure on gold. Higher interest rates and increasingly hawkish policy expectations are clearly weighing on gold prices. However, the Federal Reserve has not yet fully confirmed the market’s highly hawkish expectations, while previous Treasury measures aimed at stabilising yields have had limited short-term impact.

Traditional Market Relationships Weaken as Gold Shows Stronger-Than-Expected Resilience

Even if Treasury yields remain above 5% and continue creating headwinds for gold, the precious metals market has shown stronger-than-expected resilience.

Under the traditional market framework, rising Treasury yields combined with hawkish policy expectations would normally strengthen the U.S. dollar, creating 2 sources of pressure on gold. However, this relationship has weakened considerably. The growing “currency debasement hedge” trade has contributed to this divergence. Safe-haven demand, continued central bank gold purchases, and renewed inflows into physically backed gold ETFs are helping offset the impact of higher Treasury yields.

More analysts are paying attention to the growing divergence between gold and Treasury yields. Although a 5% Treasury yield increases the opportunity cost of holding gold and could continue to generate short-term volatility, gold’s ability to withstand a high-rate environment without a corresponding surge in the U.S. dollar suggests that investors are increasingly focused on broader fiscal risks and concerns over the long-term purchasing power of currencies.

Underlying Market Dynamics Are Shifting as Gold’s Hedging Role Becomes More Important

Traditionally, gold analysis has focused heavily on 2 indicators: U.S. Treasury yields and the U.S. Dollar Index. However, as fiscal risks and concerns over currency credibility become increasingly important, the old pricing framework can no longer fully explain movements in gold. In the short term, rising Treasury yields will continue to create volatility, and gold may still face periodic pressure and pullbacks.

However, investor behaviour has changed. Continued central bank gold purchases and renewed ETF inflows reflect growing global concerns about the long-term purchasing power of sovereign currencies. Markets are no longer treating gold purely as an interest-rate-sensitive asset. Instead, it is increasingly being viewed as a core hedge against deteriorating fiscal conditions and geopolitical instability.

Conclusion:

Overall, rising Treasury yields and hawkish monetary policy expectations remain the most direct short-term pressures on gold. Whether the U.S. 10-year Treasury yield can remain above 5% will continue to influence near-term gold volatility. However, the traditional relationship between gold, Treasuries, and the U.S. dollar has weakened, signalling a shift in underlying market dynamics. Continued central bank gold purchases and demand for protection against currency depreciation remain important sources of support. Short-term volatility caused by interest-rate movements does not change gold’s longer-term role as a hedge against systemic fiscal and monetary risks. As old and new pricing frameworks overlap, investors may need to look beyond Treasury yields alone and pay greater attention to long-term global fiscal risks.

WTI Crude Oil: Breakout or Reversal?

Oil prices have rallied sharply over the past few weeks as geopolitical and physical supply risks in the Middle East have increased. The latest leg higher followed attacks on Saudi energy infrastructure, including the shutdown of the country’s East-West Pipeline, an important alternative export route if flows through the Strait of Hormuz are disrupted. Meanwhile, diplomatic efforts among Gulf countries have stalled, global crude inventories continue to decline, and disruptions to Russian refinery output have pushed diesel and middle-distillate markets into extremely tight conditions.

This combination pushed WTI from around the low-$80 range in August to approximately $103 per barrel. However, oil has now reached an important technical decision zone. WTI is testing the upper boundary of its broader descending channel as well as the upper area of its shorter-term uptrend.

Bullish Scenario

A sustained break above approximately $103–$105 would suggest that the market is beginning to price in more than just a geopolitical risk premium.

The bullish scenario would strengthen if the Saudi pipeline remains offline, flows through the Strait of Hormuz deteriorate, inventories continue to decline, or geopolitical tensions escalate further. In this environment, a confirmed breakout could open the way towards approximately $108–$112. If physical supply disruptions worsen significantly, the previous highs around $116–$120 would also become relevant again.

Simply put:

Persistent supply disruption → tighter physical supply → resistance breaks → bullish continuation.

Bearish Scenario

The alternative is that much of the current geopolitical risk has already been priced into oil.

WTI has risen around 25% from its August lows and is now facing significant resistance. If Saudi infrastructure is restored relatively quickly, exports through the Strait of Hormuz continue to flow normally, or diplomatic progress reduces the perceived threat to supply, some of the geopolitical risk premium could unwind.

Therefore, if oil is rejected around $103–$105 and subsequently falls back below approximately $100, the probability of a deeper correction towards the mid-to-high $90 range would increase.

The bearish chain would be:

Supply concerns ease → geopolitical risk premium unwinds → resistance holds → bearish reversal/correction.

Conclusion:

What Matters Most Now

The crude oil market is already aware that geopolitical risks are elevated. For oil prices to move significantly higher from here, the market may need fresh evidence of actual supply losses rather than simply more headlines surrounding existing tensions.

The key area to watch is therefore $103–$105. A breakout and sustained move above this zone = increasing probability of bullish continuation. Failure to break through and rejection from this area = increasing risk of a meaningful correction.

Hawkish Fed Rate Hike Supports the Dollar, but Will There Be More Hikes in 2027?

The Federal Reserve’s hawkish rate hike on Wednesday pushed the U.S. dollar to its strongest single-day performance in 3 months, with the Dollar Index breaking above 100 and major non-U.S. currencies coming under broad pressure. The dot plot indicates another rate hike this year, but the policy path for 2027 remains uncertain.

The Fed’s hawkish rate hike on Wednesday drove the U.S. dollar to its strongest single-day performance in 3 months, with the Dollar Index breaking above 100 and momentum clearly favouring the dollar. Although short-term momentum remains supportive, the dollar may already have reached its high for the year, meaning the current rebound could prove corrective rather than the beginning of a broader trend reversal.

Dollar Strengthens: Hawkish Fed Hike Drives Best Single-Day Performance in 3 Months

The Fed unanimously approved the rate hike, helping the U.S. dollar record its strongest single-day performance in 3 months. The hawkish move effectively signalled another 25-basis-point hike before December, although whether the Fed will raise rates again in 2027 remains uncertain.

This was the Fed’s first rate hike since July 2023, but there are doubts over whether the current tightening cycle will match the intensity of the previous one. In 2022, the Fed raised rates by a combined 150 basis points over its first 3 meetings and ultimately delivered 525 basis points of tightening across 11 rate hikes.

This time, after only 1 rate hike, there is already uncertainty over whether the Fed will deliver more than 1 additional increase, while markets remain cautious in pricing further tightening next year.

Forecast Signal: 1 More Hike This Year, but 2027 Remains Uncertain

Warsh avoided giving strong forward guidance, which is not particularly surprising given the political and economic pressures surrounding the Fed. The President has called for lower rates, while economic data and persistent inflation continue to push monetary policy in the opposite direction.

As a result, there was limited reason for the Fed to signal several additional hikes at this meeting, particularly while the inflation outlook remains heavily influenced by elevated oil prices. The projected federal funds rate rose to 4.1%, effectively signalling another rate hike this year, while federal funds futures are roughly divided over whether the next increase will come in October or December.

The 2026 core PCE inflation forecast was raised from 3.3% to 3.4%, while headline PCE was also revised 0.1 percentage points higher to 3.7%. The growth outlook was revised slightly higher, while the 2027 unemployment forecast was lowered, providing another subtle but ultimately hawkish signal.

The brief statement said economic activity was “expanding at a solid pace” and that “inflation remains elevated,” while the rate increase would support a “timelier return to the Committee’s 2% goal.”

Trump’s Comments: Warsh Was Advised to “Vote With the Committee”

Meanwhile, President Trump’s latest comments regarding Federal Reserve policy attracted attention. Trump said on Wednesday that he had advised Fed Chair Kevin Warsh to vote in favour of the rate hike because other Fed policymakers were expected to support it regardless. Trump added that he did not expect Warsh to follow his instructions and said he wanted the Federal Reserve to “remain independent.”

The remarks contrast with his criticism of the committee as being “politicised,” highlighting tension between his public position on Fed independence and his comments regarding individual policymakers.

Market Review: Dollar Surges as Wall Street Weakens

The U.S. Dollar Index rose to a 6-week high, while EUR/USD fell to its lowest level since July 31. GBP/USD declined 0.73%, pressured by the hawkish Fed and weaker-than-expected UK CPI data, which reduced expectations for an imminent Bank of England rate hike. USD/CAD rose for a 6th consecutive session and moved within a few points of 1.4. USD/JPY advanced for a 3rd consecutive day and closed above 156. AUD/USD fell below 0.71 for the first time in 4 weeks. Brent crude futures declined 2.66%. On Wall Street, the Dow Jones led losses with a 1.2% decline, while the S&P 500 fell 0.4% and the Nasdaq was broadly unchanged.

None of these moves were extreme, highlighting continued market hopes that the tightening cycle may not become overly aggressive.

Core View: Short-Term Momentum Supports the Dollar, but This Year’s High May Already Be in Place

Although momentum clearly supports the U.S. dollar in the short term, the broader market view remains that the dollar may already have reached its high for the year despite the Fed’s hawkish rate hike.

This view is based on expectations that the current tightening cycle will be far less aggressive than in 2022, while uncertainty remains over whether the Fed will continue raising rates in 2027. Markets are currently pricing further tightening cautiously.

The dollar’s near-term strength may therefore represent a corrective rebound rather than a broader trend reversal. If upcoming inflation data fails to confirm the need for further tightening, or expectations for an October or December rate hike fade, the dollar’s upside potential could become limited.

Conclusion:

Hawkish Rate Hike Supports the Dollar in the Short Term, but Uncertainty Over the Tightening Cycle Limits Upside

Overall, the Fed’s hawkish rate hike and its projection for another increase this year have provided short-term momentum for the U.S. dollar. The Dollar Index has moved above 100, while major non-U.S. currencies have come under broad pressure. However, the strength and duration of the current tightening cycle are expected to remain well below those seen in 2022, while the policy path for 2027 remains uncertain and markets are pricing further tightening cautiously.

The market continues to consider the possibility that the dollar’s high for the year may already have been reached, meaning the current rally could prove corrective. Going forward, attention will remain on the evolution of October and December rate-hike expectations, whether inflation data supports further tightening, and how developments in the Middle East and oil prices affect the inflation outlook.

Overview of Key Global Economic Events This Week:

Monday (September 21): Canada National Economic Confidence Index; U.S. August Chicago Fed National Activity Index; Bank of Canada Governor Macklem speaks

Tuesday (September 22): UK September CBI Industrial Trends Orders; Eurozone September Consumer Confidence preliminary reading; U.S. weekly Redbook retail sales year-on-year; Reserve Bank of Australia Governor Bullock speaks

Wednesday (September 23): U.S. weekly API crude oil inventory change; Eurozone September Manufacturing PMI preliminary reading; UK September Manufacturing PMI preliminary reading; U.S. weekly EIA crude oil inventory change

Thursday (September 24): Australia August seasonally adjusted unemployment rate; Australia August part-time employment change; UK September CBI Retail Sales Expectations Index; U.S. weekly seasonally adjusted initial jobless claims; Swiss National Bank interest rate decision

Friday (September 25): U.S. August durable goods orders preliminary month-on-month; U.S. September University of Michigan Consumer Sentiment final reading; New York Fed President Williams speaks

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