FX Week 7–11 Sep: Oil lifted rate expectations, but the yen kept the dollar from dominating
🛢 U.S.–Iran tensions and restrictions around the Strait of Hormuz became the main market driver. Brent briefly approached $110 per barrel before easing toward $104–106 on hopes of diplomatic progress, but elevated energy prices continued to raise imported inflation risks and push global policy expectations in a more hawkish direction.
🏦 The ECB raised its deposit rate by 25 basis points to 2.50% on September 10 and lifted its 2027 inflation forecast. In the U.S., August PPI and CPI data continued to show persistent price pressures, pushing market-implied odds of a 25 bp Fed hike next week to around 85–90%. The 10-year Treasury yield moved close to 5%.
💴 Even so, DXY ended the week near 99.1 and was broadly unchanged. The yen stood out as USD/JPY fell toward 153–154, supported by expectations of another BoJ hike, stronger wage and GDP data, and an unwind in yen-funded carry trades. CFTC data also showed speculators shifting sharply from net short to net long JPY.
📊 Options markets reflected heavy demand for protection ahead of the Fed and BoJ, with one-week USD/JPY implied volatility near 12% and skew clearly favoring further yen strength. EUR/USD remained near 1.16, GBP received some support from stronger UK GDP data, while AUD and NZD stayed under pressure from weaker risk sentiment.
📅 The week of September 14–18 could remain highly volatile, with Hormuz diplomacy on September 14, the Fed on September 16, the BoE on September 17 and the BoJ on September 18. Oil will continue to shape the inflation premium, the Fed will guide the dollar, while the BoJ may determine whether the yen carry unwind still has room to run.
#Forex $GTC
🛢 U.S.–Iran tensions and restrictions around the Strait of Hormuz became the main market driver. Brent briefly approached $110 per barrel before easing toward $104–106 on hopes of diplomatic progress, but elevated energy prices continued to raise imported inflation risks and push global policy expectations in a more hawkish direction.
🏦 The ECB raised its deposit rate by 25 basis points to 2.50% on September 10 and lifted its 2027 inflation forecast. In the U.S., August PPI and CPI data continued to show persistent price pressures, pushing market-implied odds of a 25 bp Fed hike next week to around 85–90%. The 10-year Treasury yield moved close to 5%.
💴 Even so, DXY ended the week near 99.1 and was broadly unchanged. The yen stood out as USD/JPY fell toward 153–154, supported by expectations of another BoJ hike, stronger wage and GDP data, and an unwind in yen-funded carry trades. CFTC data also showed speculators shifting sharply from net short to net long JPY.
📊 Options markets reflected heavy demand for protection ahead of the Fed and BoJ, with one-week USD/JPY implied volatility near 12% and skew clearly favoring further yen strength. EUR/USD remained near 1.16, GBP received some support from stronger UK GDP data, while AUD and NZD stayed under pressure from weaker risk sentiment.
📅 The week of September 14–18 could remain highly volatile, with Hormuz diplomacy on September 14, the Fed on September 16, the BoE on September 17 and the BoJ on September 18. Oil will continue to shape the inflation premium, the Fed will guide the dollar, while the BoJ may determine whether the yen carry unwind still has room to run.
#Forex $GTC
