Strong NFP Lifts Dollar; Oil Gains Keep Inflation in Focus 

Market Wrap-up: Dollar Rises Following Strong US Jobs ReportThe final trading session of last week was largely shaped by the US Non-Farm Payrolls report and developments in the Middle East.

According to data from the US Bureau of Labor Statistics, non-farm payrolls increased by 162,000 in August on a seasonally adjusted basis, while the unemployment rate remained at 4.1%, in line with expectations. Economists surveyed by Dow Jones had forecast an increase of just 53,000 jobs.

The DXY rose following the report and briefly approached 99.40, while spot gold fell 2.2% to $4,376.04 per ounce. Major US equity indices also closed lower, with the Nasdaq, Dow Jones and S&P 500 all declining.

The stronger jobs figures were consistent with recent assessments from Federal Reserve officials that the US labour market remains stable. The data also added to the factors the Fed will consider ahead of its next monetary policy meeting on 16 September.

Despite calls from the Trump administration for lower interest rates, markets increased their expectations for a potential Fed rate hike.

Meanwhile, Cleveland Fed President Beth Hammack said on Friday that the current monetary policy stance was not restrictive and reiterated that inflation remained too high.

Earlier, on 3 September, Vice President JD Vance called for lower rates, describing such a move as an appropriate and responsible response to recent US inflation data.

Developments in the Middle East also remained relevant to the inflation outlook. With US-Iran military clashes continuing into the seventh month of the conflict, oil prices moved higher, while markets assessed how developments in the Middle East could affect inflation and the interest rate outlook.

For the week, Brent crude gained nearly 8%, while WTI rose almost 10%. Citi raised its average Brent forecast for the third quarter to $86 per barrel from $80, noting that the reopening of the Strait of Hormuz was taking longer than previously expected.

ANZ analysts also raised their short-term Brent forecast to $95 per barrel and said prices could move higher if developments in the Middle East continued to affect regional supply conditions.

Looking ahead, markets will monitor a fresh set of US inflation and labour market data, including ADP Employment Change Weekly, Initial Jobless Claims, PPI and Core PPI, as well as the University of Michigan Consumer Sentiment and Inflation Expectations data.

The European Central Bank will also hold its latest monetary policy meeting this week. Markets expect the ECB to raise interest rates by 25 basis points at its meeting on 10 September, taking the deposit facility rate to 2.5%. This follows Eurozone inflation rising to 3.3% in August 2026, its fastest pace in nearly three years and well above the ECB's 2% target.

DXY:

Key takeaway:

The DXY rose after US Non-Farm Payrolls data came in stronger than expected.Calls for lower rates from the Trump administration were outweighed by stronger labour data, which pushed market expectations towards a potential Fed rate hike.Technical Outlook:

Daily Bias: BullishSupport: 98.83   Resistance: 99.62   

Gold:

Key takeaway:

Gold came under pressure from a stronger US dollar, making dollar-priced bullion more expensive for many overseas buyers.Rising oil prices kept inflation risks in focus, supporting expectations that interest rates could remain higher for longer.Technical Outlook:

Daily Bias: BearishSupport: 4,365Resistance: 4,449 

Oil:

Key takeaway:

Brent and WTI posted strong weekly gains, with Brent rising 8% and WTI climbing nearly 10%.Updated forecasts from Citi and ANZ reflected continued concerns over near-term supply conditions.Technical Outlook:

Daily Bias: BullishSupport: 88.74 Resistance: 93.17  

EUR/USD:

Key takeaway:

The ECB meeting is the main focus for the euro, with markets expecting a 25-basis-point rate increase to 2.5%.Inflation remains above target, while weaker retail sales point to softer consumer demand across the Eurozone. 

Technical Outlook:

Daily Bias: BearishSupport: 1.15849Resistance: 1.16268 

Calendar Watch:

ECB Interest Rate Decision: The key event for the euro, with attention on the ECB’s guidance following the expected rate decision.ADP Employment Change Weekly: A fresh update on private-sector hiring ahead of the latest US labour market signals.Initial Jobless Claims: Closely watched for signs of any shift in employment conditions.PPI & Core PPI: These releases could provide further insight into the direction of producer price pressures.Michigan Consumer Sentiment & Inflation Expectations: Markets will look for changes in household confidence and longer-term inflation views.Whether you are new to the markets or an experienced trader, stay connected to global markets with CPT Markets.

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