This week, global markets repriced in inflation data and interest rate hike expectations . US August CPI accelerated month-on-month, oil prices remained in triple digits, US Treasury yields rose to multi-year highs, and the interest rate futures market saw a significant increase in bets on a rate hike next week. The US dollar index halted its decline and recovered slightly, with USD/CHF leading the gains. The yen strengthened due to expectations of a Bank of Japan rate hike, the euro weakened, and the pound was relatively resilient. Precious metals strengthened, while crude oil retreated after a continuous rise. Overall, the dollar's rebound appears more like a technical correction, and divergence among non-US dollar currencies has widened.

US Dollar Index

This Week's Market Recap: The US dollar index closed almost flat for the week, initially declining before rebounding and finding support near key levels before recovering. Short-term bearish momentum has weakened. Economic Data/Events Summary: The US August CPI accelerated month-on-month, high oil prices intensified inflation concerns, the interest rate futures market significantly increased the probability of a rate hike next week, and US Treasury yields remained high, supporting the dollar. Analyst/Institutional Views Summary: Major overseas institutions believe that the accelerated core CPI increases the likelihood of a rate hike at the next Fed meeting, providing interest rate differential support for the dollar; however, Middle East geopolitical tensions and oil price volatility limited the dollar's gains. The market focus is on whether the dollar's rebound can transition from a technical correction to a trend reversal, rather than providing a direct direction.

USD/JPY

This Week's Market Recap: USD/JPY fell significantly on the weekly chart, with the yen strengthening for the second consecutive week. Economic Data/Events Summary: Japan's wholesale inflation remained high in August, reinforcing the case for a Bank of Japan (BOJ) rate hike this month; sources indicate the BOJ may raise rates next week, and could signal accelerated tightening if price pressures intensify. US CPI pushed up US Treasury yields but failed to prevent the yen's appreciation. Analyst/Institutional Views Summary: Major overseas institutions attributed the yen's strength to expectations of BOJ policy normalization and discussions about the narrowing US-Japan interest rate differential. The market is focused on whether the BOJ's rhetoric will be hawkish, and the pressure of high oil prices on Japan's terms of trade. Overall, the yen outperformed other major currencies this week.

EUR/USD

This Week's Market Recap: The EUR/USD pair saw a slight weekly decline, marking three consecutive weeks of losses and showing weakness among major non-US currencies. Economic Data/Events Summary: US inflation data reinforced expectations of a Fed rate hike, and a rebounding dollar pressured the euro. The Eurozone itself lacked stronger catalysts, and the market continued to assess energy prices and growth prospects. Analyst/Institutional Views Summary: Major overseas institutions believe that the euro is influenced by the dollar interest rate differential and risk appetite fluctuations in the short term. If US Treasury yields remain high, the euro's upside potential may be limited; however, the dollar's rebound has not yet created widespread pressure on all non-US currencies, and the euro may still find support near key levels. The market is focused on whether next week's Fed meeting and European data can alter the relative strength of the pair.

GBP/USD

This Week's Market Recap: GBP/USD rose slightly for the week, showing a slightly bullish bias with a relatively stable price level, outperforming the Euro. Economic Data/Events Summary: US CPI and interest rate hike expectations boosted the US dollar, but the pound's decline was limited; market opinions remain divided on the Bank of England's policy path and inflation stickiness. Analyst/Institutional Views Summary: Major overseas institutions pointed out that the pound's resilience reflects the divergence among non-US dollar currencies, with the pound being more sensitive to dollar interest rate differentials and risk sentiment. If the dollar continues to recover, the pound may experience a correction; if the dollar's rebound slows, the pound's relative strength may continue. The market is focused on UK inflation and employment clues, as well as the overall impact of the Fed meeting on the dollar. Overall, the pound was the relatively stronger performer among the divergent non-US dollar currencies this week.

USD/CHF

This Week's Market Recap: USD/CHF led the gains for the third consecutive week, with two medium-to-long-bodied bullish candles pushing it closer to a key resistance level. Economic Data/Events Summary: US inflation data strengthened expectations of interest rate hikes, leading to a stronger dollar and US Treasury yields, a confluence of safe-haven demand and dollar-related factors. Middle East geopolitical tensions increased safe-haven demand, also supporting the Swiss franc, but the dollar remained stronger. Analyst/Institutional Views Summary: Major overseas institutions believe the Swiss franc's movement aligns with the dollar's rebound, with interest rate differentials and safe-haven appeal acting simultaneously. The market focus is on whether the Swiss franc can break through key resistance. If expectations of a US interest rate hike continue to rise, USD/CHF may remain relatively strong; if risk sentiment improves, safe-haven buying of the Swiss franc may weaken. Overall, it was one of the strongest performing pairs this week.

USD/CAD

This Week's Market Recap: The USD/CAD pair saw a slight weekly gain, alternating between gains and losses, slowly rising from lows, with the latest bullish candle approaching key resistance. Economic Data/Events Summary: Oil prices retreated after a period of continuous gains but remained in triple digits, with diesel prices high. As an energy exporter, Canada's dollar is influenced by both oil prices and the US dollar. US CPI pushed up the US dollar, but the resilience of oil prices limited the Canadian dollar's decline. Analyst/Institutional Views Summary: Major overseas institutions believe that the USD/CAD pair is in a bottoming-out and rebound momentum accumulation phase, and has not yet fully turned bullish. If oil prices strengthen again, the Canadian dollar may find support; if US Treasury yields continue to rise, the USD/CAD pair may have room for further recovery. The market is focused on crude oil inventories and the Federal Reserve meeting.

AUD/USD

This Week's Market Recap: The AUD/USD pair declined for the week, experiencing a slight rebound during the day, but remained under overall pressure. Economic Data/Events Summary: The US dollar strengthened due to inflation and interest rate hike expectations, weighing on the Australian dollar; risk appetite was influenced by Middle East geopolitical tensions and oil price volatility, resulting in divergent performance among commodity currencies. Analyst/Institutional Views Summary: Major overseas institutions believe that the Australian dollar is sensitive to global risk sentiment and the US dollar's performance. If US Treasury yields remain high, the Australian dollar's rebound may be limited; if the US dollar's rebound is a technical correction and risk sentiment improves, the Australian dollar may have room for recovery. The market is focused on economic clues from major trading partners and commodity prices. Overall, the Australian dollar was relatively weak among non-US dollar currencies this week, but there has been no discussion of a trend reversal.

crude

This Week's Market Recap: Brent and WTI crude oil prices retreated after eight consecutive trading days of gains, experiencing significant weekly and intraday declines, although WTI crude oil remained around triple digits. Economic Data/Event Summary: Escalating geopolitical tensions in the Middle East initially pushed up oil prices, but profit-taking and easing supply concerns led to a pullback; diesel prices are at record highs, indicating that inflation may remain high and spread to broader sectors. Analyst/Institutional Views Summary: Major overseas institutions believe that high oil prices are a key factor in the rising expectations of a Fed rate hike. If oil prices remain in triple digits, the inflation outlook is unlikely to improve significantly in the short term; however, the pullback after consecutive gains also reflects the market's repricing of demand and geopolitical risk premiums. The market is focused on the Middle East situation and inventory data.

Gold and Silver

This Week's Market Recap: Spot gold and silver strengthened, with silver showing a larger increase. Precious metals remained resilient despite high US dollar and US Treasury yields. Economic Data/Event Summary: Accelerated US CPI and rising expectations of interest rate hikes fueled discussions about real interest rates, but Middle East geopolitical tensions and inflation hedging demand supported precious metals. The US dollar index closed almost flat for the week, failing to exert widespread downward pressure on precious metals. Analyst/Institutional Views Summary: Major overseas institutions believe that precious metals are simultaneously influenced by safe-haven demand, inflation, and interest rate expectations, with silver more strongly reflecting industrial and speculative attributes. If US Treasury yields continue to rise, precious metal volatility may increase; if geopolitical risks escalate, safe-haven buying may continue. The market is focused on the Fed meeting and the direction of the US dollar.

US Treasury bonds

This Week's Market Recap: US Treasury yields generally rose, with the 10-year yield reaching a multi-year high and approaching a key psychological level. The 2-year and 5-year yields rose in tandem, while the 30-year yield saw a slight decline. Changes in the yield curve are attracting attention. Economic Data/Event Summary: US August CPI rose 0.4% month-on-month and 3.4% year-on-year, with core CPI rising 2.4% year-on-year. High oil prices exacerbated inflation concerns. The probability of a 25 basis point rate hike next week in the interest rate futures market rose from approximately 67.5% to approximately 86.8%. Analyst/Institutional Views Summary: Several major overseas institutions predict a rate hike next week. Luis Alvarado of Wells Fargo Investment Research believes the first rate hike is just the beginning; Shawn Snyder of Potomac Fund Management believes the bond market perceives a delayed Fed response. Market discussion focused on the competitiveness of bonds relative to stocks after the 10-year yield reached a key level. The main themes this week were inflation repricing and rising rate hike expectations . High US Treasury yields, a recovering dollar, a strengthening yen, and divergence among non-US currencies constituted the main market picture. The USD/CHF pair was the strongest, the pound was resilient, the euro was weak, and the Australian dollar was under pressure; crude oil retreated but remained at high levels, while precious metals strengthened. Next week's Fed meeting, Bank of Japan expectations, and Middle East geopolitical tensions are key variables. The market has not yet formed a one-sided consensus; it is more about technical corrections and adjustments in relative strength.

QA module

Q: How did CPI and oil prices jointly push up US Treasury yields? A: The August CPI accelerated month-on-month, while oil prices remained in the triple digits, with diesel prices high, raising market concerns about inflation spreading to broader sectors. As a result, the interest rate futures market raised its probability of a rate hike next week, leading to a more pronounced rise in short-term yields, with the 10-year yield approaching a key level. The bond market believes the Fed's policy response may be delayed. Q: Why didn't the dollar's rebound suppress all non-US currencies? A: The dollar index closed almost flat for the week, with the rebound concentrated in USD/CHF and USD/CAD. The euro was weak, but the pound was resilient and the yen strengthened. Within non-US currencies, the rebound was influenced by their respective central bank expectations, energy exposure, and risk sentiment; the dollar's rebound was more like a correction after a sharp drop than a comprehensive trend. Q: What is the relationship between the yen's strength and the Bank of Japan's expectations? A: High wholesale inflation in Japan has led sources to suggest the Bank of Japan may raise interest rates next week and may hint at accelerated tightening. Discussions about the narrowing US-Japan interest rate differential have intensified, pushing the yen stronger for the second consecutive week, a trend that even rising US Treasury yields haven't reversed. Q: Why are precious metals and crude oil diverging? A: Crude oil prices retreated after a continuous rise, but geopolitical risks and high diesel prices still support the inflationary logic; gold and silver were supported by safe-haven demand and inflation hedging, with silver showing a larger increase. Both point to persistent inflation risks, but their trading rhythms differ. Q: What are the key variables next week? A: The Fed meeting and signals from the Bank of Japan are crucial, while Middle East geopolitical situations and oil price movements will influence inflation expectations. The market will test whether the dollar's recovery can continue and whether the divergence between non-US currencies will further widen.