The US dollar began the week consolidating the strong gains recorded after Federal Reserve Chair Warsh delivered a hawkish message at Jackson Hole. Markets are now focused on upcoming US employment data and the September Federal Open Market Committee meeting, although expectations for another rate increase are not fully settled. At the same time, inflation figures from Spain, France, and Germany have strengthened the case for additional tightening by the European Central Bank. In Japan, a combination of official intervention and stronger domestic indicators has reinforced expectations that the Bank of Japan could raise rates in September. Meanwhile, renewed tensions in the Middle East pushed oil prices sharply higher.

Asia Pacific Markets

Trading across Asia-Pacific reflected diverging economic signals. In Japan, stronger retail sales and industrial production figures supported expectations of a Bank of Japan rate increase next month. Retail sales rebounded strongly in July, while industrial output exceeded forecasts. Despite firmer domestic rates, the yen remained under pressure after falling throughout the previous week, though intervention concerns limited additional weakness. In Australia, rising inflation expectations and resilient private-sector credit growth encouraged markets to price in a greater probability of another rate hike before year-end. China’s latest PMI surveys remained below the 50 threshold, indicating continued weakness in both manufacturing and non-manufacturing activity.

European Markets

European investors focused on inflation developments that continue to support expectations for tighter monetary policy from the ECB. Spain’s preliminary consumer-price data showed the fastest annual increase since early 2023, while France also reported firmer inflation. German state data pointed toward a national reading above 3%, potentially the highest level since January 2024. Currency markets reflected these developments, although the euro remained under pressure after posting its first weekly decline in five weeks. Sterling also weakened during the previous week and traded within a relatively narrow range as momentum indicators softened from previously overbought conditions.

American Markets

In North America, attention remained centered on the stronger dollar, rising geopolitical risks, and commodity markets. US equity benchmarks showed resilience despite higher Treasury yields, though futures pointed modestly lower ahead of the trading session. Treasury yields eased slightly after climbing sharply before the weekend, with the 10-year note holding near recent highs. Gold continued correcting after peaking early last week, while silver also retreated following a sharp reversal. Oil prices surged after renewed Middle East hostilities, with October WTI advancing toward the upper end of its recent trading range. The Canadian dollar remained vulnerable amid uncertainty surrounding trade relations with the United States.