• Trump says Iran deal nearing, Iran denies reports of Hormuz reopening deals
• Oil slides for a fifth straight day as Middle East optimism continues
• SpaceXAi’s Grok bot agent tops 400,000 users after first month
• Nasdaq 100 hits intraday high, on track for best 4-year rally since 1999

FX Analysis

USD broke higher to fresh seven-week cycle high. There’s some minor short-term resistance around the late March high at 100.64. The past few days have seen bullish consolidation before this move north. Oil prices are the key driver and an intraday sell-off initially saw the greenback give back some gains. Iran had told the US it would open the Hormuz Strait within seven days, if the US lifted its blockade on Iranian ports. There was some optimism after Trump’s speech at the UN. But more hawkish comments from Fed officials have bolstered the odds of an October rate hike. They currently stand just above 50%.  

EUR dipped to seven-week lows as prices broke down after bearish consolidation. But prices closed off their lows. Typically, the move lower in oil should have supported the single currency, given the zone’s dependence on energy imports. In addition, ECB officials have so far maintained a notably hawkish tone, keeping an October hike firmly on the table. But markets are seeing the dollar and the Fed noises as more significant at present, aside from crude prices.

GBP followed the euro’s price action also, with cable falling to seven-week lows though closing off its lows.  Last week’s BoE meeting was not as hawkish as the ECB or the Fed. But it equally failed to really push back against aggressive market pricing for tightening. Markets predict a high chance of a BoE rate hike in November and roughly 92bp by June. That’s nearly four rate hikes. The UK’s fiscal outlook remains a primary concern for markets as the government prepares its budget in advance of the October 28 release.

JPY outperformed most of its peers as the major printed a doji. Local markets remain closed for holiday through today. That leaves liquidity thin and price action vulnerable to greater swings. Next resistance sits above 158 and the 200-day SMA at 158.40. That comes ahead of the psychologically important 160 level.

Stock Market Analysis

US stocks: The S&P 500 was flat, closing at 7,765. The Nasdaq closed up 0.82% at 30,732, as it touched an intraday record high. The Dow Jones settled lower by 0.36% at 5`1,869. Bank stocks slid on resurgent agentic fears, which weighed on the Dow. JP Morgan closed 3.4% lower and Wells Fargo was 3.9% off. The tech-heavy Nasdaq outperformed amid gains in semiconductors and memory names. Sandisk rose 6.8%. While Tech is helping to push the indices higher, the narrow breadth is concerning some. Materials were the best-performing sector, followed by Staples and Tech. Financials, Energy and Communication Services lagged. Market optimism builds on a diplomatic solution between the US and Iran, which would bring increased energy supply with it. Meta’s (-0.63%) Muse surpassed 500,000 users after the first week, with over 2 million prompts. Moderna gained another 5.6% as it hit levels last seen in early 2023.

Asian Stocks: Futures are mixed. APAC stocks mostly gained after the positive (tech) handover Stateside. The ASX 200 saw gains in tech and healthcare offset by utility, energy and financials weakness. The Nikkei 225 was closed for a holiday. The Hang Seng and Shanghai Comp were in the green with tech leading the gainers ahead of the Trump/Xi summit in Washington on Thursday.

Gold & Silver Analysis

Gold printed mildly higher as prices remained stuck in a $4,300 to $4,400 near-term range. Hawkish comments from Fed officials keep rate hikes firmly on the table for the October FOMC meeting. Tighter monetary policy is a clear headwind for non-yielding gold and silver.

Day Ahead – PMIs

Eurozone business activity is forecast to expand for a fourth month in September, although momentum may soften. The composite PMI is predicted to ease to 51.6 from 52.0, with manufacturing ticking lower to 52.6 and services to 51.4. Germany should continue to support the regional recovery, while French activity is likely to remain in contraction. Markets will look to output prices and input costs for evidence that higher energy prices are feeding into underlying inflation. Employment and new orders will also show whether the recovery is broadening. Resilient readings would reinforce expectations of further ECB tightening. Renewed weakness in services could revive concerns about the durability of the expansion.

For the UK and US, private-sector activity is expected to lose some momentum in September while remaining in expansionary territory. Businesses continue to face higher energy, wage and financing costs, while uncertainty surrounding the UK government’s fiscal plans may weigh on investment. Markets will focus on employment, new orders, and output-price components for signs of inflationary pressures. Strong activity and rising prices would reinforce expectations of rate hikes. A sharper slowdown, especially in services, would raise doubts, particularly in the UK, about the economy’s ability to absorb further monetary tightening.

Chart of the Day – Muse drives Meta into overbought territory

Mark Zuckerberg’s Meta has soared this week, as investors got excited by its new AI agent, Muse. The launch has boomed with over 2.8 million downloads in the first 12 days. Analysts are predicting it could become the most used consumer AI application since ChatGPT. The strong product market fit, Meta’s distribution reach and free tier layer have all helped. More importantly, hopes are high that this could open up a new revenue stream for the social media giant. One billion users by the end of next year, with a 3%+ conversion rate into paid users could mean $10.8 billion in annual revenue. That is broad adoption, beyond enterprise application.

The stock price has hit resistance at the January year-to-date top at $744 and look severely overbought. That doesn’t mean they can’t continue but a pullback is likely. Near-term support is down just below $700. Otherwise, the October 2025 high sits at $680.96 and the September peak at $790.80.