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The dollar ends the week with the best growth in two months amid a revision of Fed rate expectations
The US dollar is heading for its strongest week since early August: fresh data on the US economy turned out to be more stable than expected and forced traders to adjust expectations regarding further steps by the Federal Reserve System.
The dollar index declined slightly on Friday after updating its three-week high the day before, but has increased by more than 0.7% since the beginning of the week.
The yield on 2-year Treasury bonds shows the largest weekly rise since July. The market now estimates the probability of two Fed rate cuts of 25 bps by the end of the year as only 50-50, whereas previously such a scenario was almost completely taken into account in quotes.
Investors are waiting for the publication of the Personal Consumption Expenditures Price Index (PCE) for August, a key indicator of inflation for the Fed. Danske Bank notes that strong macro data «has become a warning to the regulator» and may return attention to the inflationary mandate.
Despite a slight weakening on Friday, the dollar remains close to local highs: it has updated its peaks against the Canadian dollar since May, against the New Zealand dollar since April, and against the yen over the past two months. A positive PCE report may consolidate the uptrend and confirm the best dynamics of the US currency in months.
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Expectations of OPEC+ output increase drag oil prices lower
Asian markets kick off week with gains
On Monday, most Asian equity markets ended the session in positive territory. The dollar weakened as investor focus shifted to the US, where the risk of a temporary government shutdown persists. Such a scenario could delay the release of the September jobs report and several other key data points.
Washington seeks compromise
President Donald Trump plans to meet with leaders of both congressional parties on Monday to discuss extending federal funding. Otherwise, the government will face a partial shutdown. This coincides with the introduction of new US tariffs on heavy trucks, pharmaceuticals, and a number of other goods.
Seasonal support in focus
Analysts note that the beginning of the fourth quarter is traditionally favorable for equity markets. Historically, the S&P 500 has risen in nearly three out of four such periods. In early trading, futures on the S&P 500 gained 0.2%, while Nasdaq futures rose by 0.3% after last week's pullback. European indices also opened higher, with EUROSTOXX 50, FTSE, and DAX each adding around 0.3%.
Japan and Korea move in different directions
The most notable exception was Japan's Nikkei index, which fell by 0.8%. However, as of the end of September, it still held a 5% gain. Investors are awaiting an internal LDP vote that will determine the next prime minister and could shape the country's economic strategy.
In South Korea, the KOSPI index climbed by 1.3%, securing a monthly gain of 7.6%. The broader MSCI Asia-Pacific index excluding Japan strengthened by another 0.4%, closing the month with nearly a 4% advance.
Chinese markets rise ahead of long holidays
Shares of Chinese companies in the CSI300 index rose by 0.7% on Monday. Investors turned more active ahead of Golden Week, which begins in the country on Wednesday.
Australian regulator prepares for meeting
On Tuesday, the Reserve Bank of Australia will hold its policy meeting. Analysts expect the rate to remain unchanged at 3.65%. Notably, the regulator has already cut rates three times this year.
Currency market under pressure
The dollar index fell by 0.2% to 97.952, even though the US currency was supported by strong macroeconomic data last week. The euro strengthened to 1.1726 dollars, remaining within its recent range between 1.1646 and 1.1918.
The US currency also weakened against the yen: the rate dropped by 0.4% to 148.92 yen. This came after the dollar had gained just over 1% last week, rebounding from the September low near 145.50.
Gold at historical peak
As for precious metals, gold continued to strengthen and set a new record of $3,798 per troy ounce.
Oil loses ground
Oil prices moved lower as crude supplies resumed through the pipeline from Iraq's Kurdistan to Turkey for the first time in two and a half years.
Investors are also awaiting the OPEC+ meeting scheduled for Sunday. The organization is expected to approve an output expansion of at least 137,000 barrels per day. Against this backdrop, Brent fell by 0.8% to $69.73 per barrel, while US WTI dropped by 0.7% to $65.27.
Indian markets start week higher
After the steepest weekly decline in almost seven months, Indian stock indices opened Monday in positive territory. The market was supported by energy and oil & gas stocks.
Major indices advance
By 10:02 local time, the Nifty 50 index rose by 0.43% to 24,761.5 points. The BSE Sensex gained 0.39% to 80,745.23 points.
Last week's pressure
Last week, the indices shed 2.7%, marking six consecutive sessions of losses. The sell-off was triggered by higher US H-1B work visa fees and increased duties on branded pharmaceuticals, which hurt investor sentiment and prompted capital outflows.
Energy and oil & gas lead gains
The energy sector rose by 1.2%, while oil & gas added 1.5%. Gains were driven by BPCL and HPCL shares, supported by stable fuel prices and expectations of higher company valuations.
Oil India on the rise
Shares of Oil India jumped by 2.2% after reports of a natural gas discovery on the Andaman Islands shelf.
Small and mid-cap stocks in positive territory
Shares of small- and mid-cap companies also advanced, rising by about 0.7% each.
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EUR/USD Forecast for September 30, 2025
Yesterday's bullish impulse in the single currency proved to be weak. The price tried to move further away from the MACD line after breaking above it, but by the end of the day, the upper shadow was larger than the candle body. The Marlin oscillator stalled at the neutral zero line, and this morning even hinted at a reversal downward.
The price is likely to remain in a sideways trend until the U.S. employment data is released on Friday. Even a consolidation below the MACD line (1.1708) would not be a signal for a decline toward the target of 1.1605; the market is simply waiting for Friday's data. A similar situation occurred a month ago, when the euro began to move only after the release of employment figures (green arrow). This time, however, the movement may be downward with a target of 1.1495.
On the four-hour chart, the price has stalled at the balance line. The Marlin oscillator remains in positive territory but is moving horizontally close to the line. A consolidation above the MACD line (1.1774) would signal a further rise to 1.1914, but the probability of this scenario has decreased, raising the possibility of a false breakout. We are waiting for the news on Friday.
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