Japanese Bank Stocks Surge as Bond Yields Fuel Rate Hike Bets 
Dollar Holds Near Two-Month High as Yen Approaches 160 
Gold Holds Near $4,275 as Rising Treasury Yields Fuel Fed Rate Hike Bets 
Asian Stocks Fall as Surging Bond Yields Rattle Markets 
Oil Prices Fall on U.S.-Iran Hormuz Deal Hopes 
US Stock Futures Fall as Treasury Yields Surge Ahead of Trump-Xi Summit 
ECB May Stop Rate Hikes After December, Capital Economics Says 
Fed Unveils Stablecoin Rules Under GENIUS Act 
U.S. Dollar Hits Two-Month High as Oil, Treasury Yields Surge 
Trump to Ease U.S. Fuel-Economy Standards 
US Stocks Face Jobs, Inflation Test as Fed Rate Hike Bets Rise 
US Comfortable With Canada Trade Standoff as Import Bans Loom 
Dollar Falls as Oil Eases, Yen Jumps on Intervention Signals 
Oil Prices Jump 3% as Houthi Attack Revives Supply Fears 
Japanese Yen Rebounds as Trump Flags Currency Weakness 
Trump, Xi Focus on Trade and AI at White House Summit 
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Dollar Strengthens Amid Fed Rate Uncertainty and Middle East Tensions
The US dollar surged to a seven-week high against major currencies, driven by evolving expectations for US interest rates and rising tensions in the Middle East. A robust US jobs report last week reduced the likelihood of significant Federal Reserve rate cuts, influencing market sentiment.
Fed Rate Cut Expectations Shift
Investors have adjusted their predictions for Federal Reserve rate cuts. According to the CME FedWatch tool, markets now see an 86% probability of a 25 basis points (bps) cut in November, with December easing expectations lowered to 50 bps from over 70 bps a week prior. This shift has strengthened the dollar against the euro, yen, and sterling.
Forex Market Trends
The dollar index, which measures the USD against major currencies, stood at 102.41, slightly below Friday's seven-week high of 102.69. Traders are factoring in a "no landing" scenario, with strong economic data supporting a cautious Fed approach to rate cuts.
Global Currency Movements
The euro traded at $1.0981, while the pound was at $1.3095, both near recent lows. The yen, which fell to a seven-week low of 149.10 per dollar, recovered slightly to 147.795 following remarks from Japanese officials expressing caution over future rate hikes.
Looking Ahead
Investor focus will now turn to the upcoming US inflation report and the Federal Reserve’s September meeting minutes, as well as key monetary policy decisions from New Zealand and China's reopening after the holidays.
